After Portugal asks, Brussels takes away extra profit from oil

“A taxation of extraordinary profits is a competence of the Member States and they can act on the basis of national legislation. Naturally, these measures must comply with European law” today indicated an official source of the community executive in a written response sent to the Lusa agency.

The same source recalled that “Member States can already use their national tax powers to answer questions related to social equity and, if they so wish, to create measures such as taxation of extraordinary profits”, as referred to by the institution in a communication released last April.

“The Commission will respect the decisions of the Member States and will assist and share good practice with regard to national measures and assess their impact on the single market,” said the spokesman.

The Brussels position comes after a new request from Portugal and five other countries – Austria, Germany, Italy, Poland and Spain – for the EU to move forward with a common mechanism to tax the extraordinary profits of oil companies.

In a letter sent to the Irish Presidency of the Council of this six months and to which the Lusa agency had access, the six Finance Ministers argue that it is necessary to “approach the issue of high energy prices by discussing an EU-wide framework for the taxation of extraordinary profits, taking into account the lessons learned in 2022, and this time with a more specific analysis of how profits made abroad by multinational oil companies can be included in a more targeted way”.

In missive, ministers – including Portuguese responsible Joaquim Miranda Sarmento – argue that the conflict in the Middle East continues to push energy prices and warn that the effects can extend beyond fuels, affecting the prices of other goods and services and aggravating the cost of living.

They therefore want “a common European mechanism capable of protecting the single market while ensuring that the diversity of national situations and their stakeholders are taken into account, as well as compliance with the subsidiarity principle”, according to Lusa’s missive.

Portugal and the other countries call for the matter to appear at a forthcoming meeting of EU finance ministers, such as the informal meeting held on 18 and 19 September in Dublin, under the Irish presidency of the Council.

The letter took up a question that Portugal, together with other countries, had already asked the European Commission in the spring of this year, defending a common response to tax extraordinary profits in the energy sector, as well as the solidarity contribution created in 2022.

However, Brussels at the time considered that the adoption of a tax on these profits was a decision of each Member State, considering it difficult to adopt this measure at European level given the necessary unanimity.

In view of the lack of conditions for moving forward with a harmonised solution at EU level, the Portuguese Government has adopted a national measure, but still advocates a European response.

The initiative comes at a time of pressure from the impact of rising energy costs on the purchasing power of households and on the costs of companies.