EU countries eye delay to levy on fossil fuel windfall profits

European Union countries are considering an option to delay by a year a levy on the windfall profits of fossil fuel companies, as they hunt for a deal on emergency measures to help consumers facing soaring energy bills.

The 27 EU member countries are negotiating measures proposed by Brussels last week to attempt to pull down sky-high energy costs – including bloc-wide windfall profit levies on energy firms.

The latest compromise proposal for EU countries’ negotiations, seen by Reuters, would let countries impose the EU’s planned fossil fuel levy on firms’ earnings from 2022, from both 2022 and 2023, or just from 2023 if they choose.

The European Commission had proposed that the windfall profit levy applied to surplus profits made in 2022 by oil, gas, coal and refining companies – in a bid to quickly raise cash that governments could use to help consumers and businesses cope with soaring energy prices.

“That is a very big change and not everyone will be happy about it,” a diplomat from one EU country said.

It was not immediately clear which countries had sought a delay to the measure.

Countries are also seeking leeway to keep their own national levies, rather than replacing them with the EU’s plan.

States like Greece and Italy that already have a windfall profit tax on fossil fuel firms would be able to keep those schemes, if they are deemed “equivalent” to the EU levy.

The EU levy would apply to “surplus” profits that are 20% above a company’s average taxable profits in the last four years, under the compromise drafted by the Czech Republic which currently holds the EU’s rotating presidency.

Countries could also impose a levy of above 33% of fossil fuel firms’ excess profits in a fiscal year – the proposed EU rate – if they choose, the draft said.

EU country diplomats will attempt to craft a deal on the basis of the new proposal on Wednesday. EU energy ministers would then approve the agreement at a meeting on Friday.

[Reuters]