Investment distortions could occur as a result of the solidarity contribution, according to a study by the European Parliament’s subcommittee on tax matters published on Wednesday 29 March.
Implemented in autumn 2022 (see EUROPE 13074/35), the temporary compulsory solidarity contribution will tax profits above a 20% increase in average annual taxable profits since 2018. Targeting companies in the crude oil, fossil gas, coal and refining sectors, it is similar to a windfall tax.
According to the study, investment distortions could occur if investors expected the tax instrument to be extended to other sectors.
Based on 2021 profit data, the estimated revenue gains from this solidarity contribution amount to €4.4 billion. Applying the revenue cap to electricity prices in 2022 suggests tax revenues of €106 billion.
However, actual tax revenues could deviate significantly from these figures due to different energy price levels over the period of application. Revenues can be redistributed according to Member States’ priorities to address the challenges of the energy crisis.
To read the study: https://aeur.eu/f/66n (Original version in French by Anne Damiani)