On September 7, 2022 on the website of the European Commission a Statement by Ursula von der Leyen on energy was published. In her statement Mrs. Von der Leyen put forward a set of five different suggested immediate measures to battle the astronomic electricity prices for households and companies, and the enormous energy market volatility. Below we will focus on 2 of the suggested measures.


Introduction of a cap on the revenues of companies that are producing electricity with low costs

Mrs. Von der Leyen states that the European Commission will propose a cap on the revenues of companies that are producing electricity with low costs. In this respect Mrs. Von der Leyen stated the following: “The low-carbon energy sources are making in these times – because they have low costs but they have high prices on the market – enormous revenues. Revenues they never calculated with; revenues they never dreamt of; and revenues they cannot reinvest to that extent. These revenues do not reflect their production costs. So, it is now time for the consumers to benefit from the low costs of low-carbon energy sources like, for example, the renewables. We will propose to re-channel these unexpected profits to the Member States so that the Member States can support the vulnerable households and vulnerable companies.

Unfortunately in the Statement no statements specific comments are made on how the European Commission is intending to realize its abovementioned goal.


Introductions of a solidarity contribution for fossil fuel companies

The next measure is that the same goes, of course, for the unexpected profits of fossil fuel companies. Oil and gas companies have also made massive profits. Therefore, we will propose that there is a solidarity contribution for fossil fuel companies. Because all energy sources must help to overcome this crisis. Member States should invest these revenues to, as I said, support vulnerable households and vulnerable companies, but also to invest them in clean home-grown energy sources, as the renewables are, for example.

Again the statement does not state how the Commission wants to  realize this. I don’t exactly know how this goes for other EU Member States, but in the Netherlands it is impossible to levy taxes with retro-active force that goes back before the date that the introduction of the tax or change in tax law was first announced. So in the Netherlands in it seems that such a solidarity contribution, or windfall tax, would apply to the profits that the fossil fuel companies have already realized.

In her statement Mrs. Von der Leyen states that the European Commission will discuss the five measures as discussed in her statement with the Member States at the informal EU Energy Ministers Council on Friday.

The other 3 measures that are suggested in the statement are: smart savings of electricity, facilitation of the liquidity support by Member States for energy companies and a price cap on Russian gas.

You can read the full text of the statement of Mrs. Von der Leyen here.


Copyright – internationaltaxplaza.info



Follow International Tax Plaza on Twitter (@IntTaxPlaza)




Submit to FacebookSubmit to TwitterSubmit to LinkedIn