Six EU States Seek Tax on Oil Windfall Profits

Germany, Spain, Portugal, Italy, Poland and Austria want the EU to revisit a crisis-era levy as higher fuel prices renew the debate over who should bear the cost of geopolitical disruption.

Six European Union countries are pressing for a common mechanism to tax exceptional profits earned by oil companies during the current energy shock. Germany, Spain, Portugal, Italy, Poland and Austria have asked the Irish EU presidency to place the issue on the agenda of finance ministers when they meet in Dublin on 18–19 September. The proposal revives a politically sensitive question first confronted after Russia’s invasion of Ukraine: when companies profit unexpectedly from a crisis that raises household energy bills, should governments recover part of those gains for the public?

Six governments want an EU-wide approach

According to a joint letter reported by Reuters, the six governments want EU finance ministers to discuss an EU-wide framework for taxing windfall profits rather than leaving each member state to devise its own response.

The initiative follows disruption to international energy markets connected with the conflict involving Iran and restrictions around the Strait of Hormuz. Oil prices have risen sharply, while refined fuels — particularly diesel — have experienced even larger increases.

The ministers argue that oil companies have benefited from refining margins that have increased faster than crude prices themselves. They also want the results of a European examination of refinery margins to be made available quickly, amid concerns that consumers could be paying more than underlying market conditions justify.

“We are experiencing one of the biggest supply shocks in decades,” the ministers wrote, according to reports of the letter, pointing to growing public concern about the cost of living.

The request does not yet amount to a formal European Commission proposal. Nor is there agreement among all 27 member states that a new levy should be introduced. But securing a discussion among finance ministers would move an idea debated for months onto the EU’s formal political agenda.

Europe has done this before

The concept is not new.

During the energy crisis of 2022, the EU adopted an emergency package that included what it called a temporary solidarity contribution from companies operating in the oil, gas, coal and refining sectors.

Under the Council regulation, taxable profits exceeding by more than 20% the average profits recorded from 2018 onwards were subject to an additional contribution. EU rules required a minimum rate of 33%, although member states were allowed to retain equivalent national measures.

The money was intended to support households and businesses facing exceptionally high energy costs.

That experience is now central to the new debate.

The six governments want lessons from the 2022 system to inform any future mechanism, but the latest proposal could go further by examining how multinational companies’ profits earned outside individual national tax jurisdictions might be treated.

A European Commission assessment put revenues collected under the earlier solidarity mechanism at roughly €26 billion during 2022 and 2023, although implementation differed considerably between member states.

How large are the new windfall profits?

Campaigners say the sums involved are again substantial.

A recent analysis by Transport & Environment estimated that eight large oil companies generated approximately €7.5 billion in excess profits attributable to the EU during the first half of 2026.

The analysis covered Shell, BP, TotalEnergies, Eni, Orlen, Repsol, OMV and Moeve. It compared adjusted net income during quarters affected by the current energy crisis with results during the same periods in 2025 and then estimated the share associated with EU business.

Transport & Environment described the calculation as conservative and argued that the profits demonstrate the case for a permanent European windfall mechanism.

Its methodology and conclusions remain those of an environmental advocacy organisation rather than an official EU assessment, but the figures illustrate why the issue has returned to the political agenda.

Industry warns against another exceptional tax

Oil and refining companies strongly dispute the logic behind renewed extraordinary taxation.

FuelsEurope, which represents the European refining industry, warned earlier this year that repeatedly imposing windfall taxes would undermine investor confidence and make the EU regulatory environment less predictable.

The organisation argues that European refiners need major long-term investment both to maintain energy security and to decarbonise their operations.

According to FuelsEurope, another exceptional levy could discourage investment, accelerate refinery closures and increase Europe’s dependence on imported fuels — potentially making the continent more vulnerable during future supply disruptions.

The International Association of Oil & Gas Producers Europe has made a similar argument, saying rapidly introduced taxes can affect current investment decisions at precisely the moment Europe is seeking greater energy autonomy.

This creates a genuine policy dilemma.

Governments want to protect households from prices inflated by geopolitical events. But Europe also needs companies to invest heavily in energy infrastructure, security of supply and the transition away from carbon-intensive fuels.

Germany illustrates the political divide

Even among governments supporting discussion at EU level, the proposal is politically sensitive.

German Finance Minister Lars Klingbeil, from the Social Democratic Party, has argued that companies should not be allowed to exploit the current crisis and that excessive profits linked to exceptional circumstances should benefit consumers.

But Chancellor Friedrich Merz’s Christian Democratic Union has opposed the idea of another windfall levy.

That disagreement highlights a broader divide likely to emerge across the EU.

Supporters see windfall taxation as a question of fairness: profits created primarily by war, shortages or market disruption are fundamentally different from profits resulting from innovation, productivity or investment.

Critics counter that governments cannot easily determine which part of a company’s earnings is genuinely “excessive” and warn that retrospective or frequently changing tax rules can undermine confidence in European markets.

The economics are more complicated than the slogan

Even organisations that recognise the redistributive case for windfall taxes have raised questions about how they should be designed.

In its 2026 assessment of the euro area, the International Monetary Fund noted that such taxes could transfer part of war-related energy gains from producers to consumers.

But the IMF also observed that governments already receive increased VAT and excise-tax revenues when energy prices rise and argued that those funds can be used for targeted assistance.

The economic question is therefore not simply whether companies are making more money. Policymakers must decide whether a new tax raises revenue more efficiently than existing instruments and whether its design avoids reducing investment or creating incentives for companies to shift profits to other jurisdictions.

A broader debate over who pays for crisis

Behind the technical tax discussion lies a larger political question.

Energy shocks do not affect all Europeans equally. Higher fuel and heating costs take a larger share of the income of poorer households, while transport-intensive businesses can experience sharp increases in operating costs.

Companies positioned favourably within disrupted energy markets can, at the same time, record profits that would have been unlikely under normal conditions.

For supporters of the proposed levy, this creates a case for temporary redistribution: part of the exceptional profit should finance protection for those bearing the cost of the same crisis.

More than 170 Christian organisations across 21 EU countries made a similar argument in July, calling for a permanent windfall tax on fossil-fuel profits alongside targeted support for vulnerable households and investment in the energy transition. Their initiative, linked to the Laudato Si’ Movement, framed the issue in terms of social justice as well as climate policy.

Industry representatives see a different risk: repeated extraordinary taxation could make European energy production and refining less competitive, leaving the EU more dependent on suppliers outside its borders.

Both concerns are significant. Energy affordability and energy security cannot easily be separated.

September could reveal whether the proposal has momentum

The immediate question is whether Ireland, which holds the rotating presidency of the Council of the EU, places the proposal before finance ministers in September and whether other member states are willing to join the six governments behind it.

Direct taxation remains primarily a national competence, making EU-wide tax measures politically and legally difficult. Previous European action was possible because the 2022 energy crisis was treated as an emergency requiring exceptional intervention.

A new measure would therefore require careful legal construction as well as political agreement.

The debate also arrives as European governments face competing demands: reducing living costs, financing defence, investing in the green transition and strengthening energy independence.

For households confronted with another period of high fuel prices, the issue is likely to appear more straightforward: who ultimately carries the financial burden when war and geopolitical disruption send energy prices higher?

The answer European governments give in September may shape not only this crisis, but the way the EU responds to future energy shocks.