Six European Union countries are increasing pressure to impose a common tax on oil company profits, which have soared during the war in the Middle East. The finance ministers of Germany, Italy, Austria, Poland and Portugal, along with Spain’s economy minister, have sent a letter to the Irish finance minister, as Ireland currently holds the rotating EU presidency.
The letter requests that the issue of the extraordinary tax on oil company profits be included in the agenda of the next meeting of EU finance ministers, which will take place next month in Dublin.
According to the ministers, oil companies are benefiting from rising prices and high profits in the processing of oil products, while consumers are facing rising living costs. “Oil companies are recording high profits and margins on refined products, which exceed the increase in the price of crude oil,” the joint letter says. The ministers argue that the world is facing one of the biggest energy supply shocks in recent decades and that rising costs are causing discontent in many countries. The six countries are demanding that the EU discuss a common framework for the taxation of windfall profits, also building on the experience of the temporary tax imposed in 2022, after the Russian invasion of Ukraine.
German Finance Minister Lars Klingbeil has repeatedly argued that energy companies should not profit excessively from the crisis. According to a source at the ministry, the extraordinary profits generated during the crisis should be returned to consumers. Some of the countries that have signed the letter have previously supported the idea of a tax on oil company profits.
Major energy companies have reported significant gains since the launch of military operations by the US and Israel against Iran in February, which have caused major problems in maritime transport through the Strait of Hormuz, one of the world’s most important oil shipping routes.
However, the EU has yet to officially announce any plans to impose a new tax on oil companies. Sources told Euronews that the paper is not yet finalised and that what has been reported in the media is only a preliminary draft. Even within member states, there are political divisions. In Germany, the Social Democratic Party (SPD) supports a windfall tax, while Chancellor Friedrich Merz’s Christian Democratic Union (CDU) is against it.