Energy Tax Offensive: Five EU Countries Demand Windfall Tax – Which Companies Are Affected
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Key Takeaways
- Finance ministers from Austria, Germany, Italy, Portugal and Spain called in April 2026 for the introduction of a tax on excess profits of energy companies
- The earlier windfall tax following the 2022/2023 energy crisis generated the German state nearly €2.5 billion
- Affected would be oil, gas, coal and refinery companies that benefit from sharply increased energy prices
- The original EU regulation (Regulation 2022/1854) applied only to 2022 and 2023 and has since expired
- Italy's Constitutional Court declared parts of the country's windfall tax unlawful in June 2024
Finance ministers from five EU member states are calling for the reintroduction of a tax on excess profits of energy companies in April 2026. Austria, Germany, Italy, Portugal and Spain are justifying their initiative with rising oil prices resulting from geopolitical tensions, which they say are unfairly burdening citizens, according to news agency Reuters.
Which companies would be affected by a windfall tax
A windfall tax – also referred to as an energy crisis levy – targets companies that are profiting disproportionately from sharply increased energy prices. Specifically affected would be:
- Oil and natural gas companies
- Coal producers
- Refinery companies
- Energy trading companies dealing in fossil fuels
The earlier EU regulation applied to companies that had profited from energy prices that skyrocketed following Russia's invasion of Ukraine in 2022. The current demand aims at a similar levy on oil prices that are currently rising again.
Earlier regulation generated €2.5 billion for Germany
A comparable tax already existed: The EU introduced a temporary energy crisis levy in 2022 through Regulation (EU) 2022/1854. Germany implemented this requirement with the EU Energy Crisis Levy Act – deliberately outside existing tax laws to enable swift implementation.
The regulation applied only to the first two complete financial years after 31 December 2021, so for 2022 and 2023 in the case of calendar-year financial years. During this period, the German state collected nearly €2.5 billion according to research material. The levy has since expired.
German SPD politicians drive forward new version
Within Germany, it is primarily SPD politicians who are pushing for reintroduction. Bundestag President Bärbel Bas and a taskforce leader named Zorn are calling for the seizure of "excessive profits in the energy sector" and "war-related corporate earnings". The reasoning is similar to that of 2022: extraordinary profits resulting from external crises should be used to ease the burden on the population.
Italy's difficult experiences as a warning signal
Italy is considered a pioneer in this form of taxation. The government under Mario Draghi introduced a windfall tax in 2022, which initially was regarded as exemplary. However, practical implementation proved problematic: In June 2024, Italy's Constitutional Court declared parts of Draghi's windfall tax unlawful.
Despite these legal setbacks, the government of Giorgia Meloni strengthened its measures in this area in 2026. Italy's experiences show that legally sound design of a windfall tax is complex and requires careful constitutional review.
Legal hurdles and political implementation
EU-wide introduction or reintroduction of a windfall tax requires either a new regulation at European level or coordinated national legislation. The original Regulation (EU) 2022/1854 was temporally limited and tailored to the acute energy crisis following the start of war in Ukraine.
Whether a majority of the 27 EU member states will support a new version remains open. Countries with strong energy industries or more liberal tax policies are likely to resist. However, the initiative by the five finance ministers shows that the issue is back on the political agenda in light of volatile energy markets and geopolitical uncertainties.
Assessment for investors and energy companies
For shareholders of energy companies, the demand initially represents political risk, not immediate certainty. Specific legislation is still pending. Should a new windfall tax come about, it would – like the predecessor regulation – likely be time-limited and tied to concrete profit increases.
The earlier regulation was based on a comparison of average taxable profits. Excess profits were those profits that exceeded a certain threshold above the historical average. A similar structure would also be expected for a new version to address constitutional concerns.
Energy companies in the fossil sector are already facing structural challenges from the energy transition. Additional tax burden during high-price phases would further reduce profit prospects – a factor investors should consider when evaluating these securities.