Excess profit tax for corporations: Other EU countries are showing the way

Many energy companies are benefiting from the current high prices. Some EU countries such as Spain or Belgium are therefore introducing excess profit tax for corporations. In Germany, there is still a heated debate about this.

These figures speak for themselves: the big energy companies have been able to boost their profits sharply in recent months – BP’s net profit has tripled, as have oil giants Chevron and Exxon; others have doubled their plus. The Ukraine war and the ever-scarcer supply of energy around the world are evidently allowing such companies to see their income spurt all over the world.

The energy companies make a profit too

The Essen-based energy group RWE, which is still very active in generating electricity from lignite, has significantly raised its profit expectations for this year – instead of just under four billion, they are now assuming five and a half billion euros, they say.

And this at a time when many people have to reckon with the possibility that they will soon no longer be able to pay their gas, electricity or oil bills because they too will double, maybe even triple.

The EU Commission suggests the tax

At the EU Commission in Brussels, the impression is getting stronger: it doesn’t go together. That’s why she had already given the member states the green light in spring for a so-called excess profit tax: a tax that at least partially skims off such crisis profits.

EU Consumer Protection Commissioner Vera Jourova says such a tax – applied correctly – is good and efficient because this tax is only aimed at additional government revenue from temporary excess profits; Company decisions would not be influenced by this.

The EU Commission cannot prescribe such a tax to the member states, but it does suggest it. After all, it’s about supporting people who can no longer afford the increasingly expensive energy either now or in the autumn at the latest. The idea is that this can be financed with revenue from an excess profit tax.

Some EU countries are leading the way

In fact, several countries in the European Union are already in the process of introducing such a tax. Spain wants to take in seven billion over the next two years and use it directly for social spending. Belgium intends to tax energy companies’ excess profits at 25 percent and also use the revenue to lower energy costs for private households.

Italy wants to do something similar – there is the windfall tax, as experts call it – a matter that has already been decided. And Austria and France are also considering such a step – in Paris also with the argument that energy companies have even been given additional relief through tax cuts or tank discounts.

And Germany?

Rasmus Andresen, a member of the European Parliament, says Germany should take this as an example: “We Greens are therefore proposing an excess profit tax of 50 percent on excessive profits. And another part of these profits should flow into investments in renewable energy, which we urgently need.” Federal Finance Minister Christian Lindner from the FDP, however, consistently rejects this. An excess profit tax distorts market mechanisms and, in cases of doubt, has undesirable side effects.

This is also the view of the CSU member of the European Parliament, Markus Ferber. After all, there are also energy companies that are currently making the opposite of high profits – such as the German company Uniper, which the federal government has just given financial support to prevent it from collapsing due to the rapid increase in gas procurement costs. Uniper plays a central role in supplying gas to millions of households in Germany.

“Well, it’s not that easy to suddenly make such huge profits, it varies greatly from company to company. And that’s why we need sensible tax systems and not additional taxes,” says Ferber.

Great Britain: 25 percent higher rate

It is Great Britain, of all people, which is considered to be particularly economically liberal, which did not hesitate and is asking oil and gas producers there to pay a flat rate tax rate that is 25 percent higher this year. Excess profits can also be skimmed off that easily. Many in the EU consider this to be exemplary – even if the British are no longer in the EU.