BRUSSELS

Spain, Germany, Italy, Austria, and Portugal have formally called on the European Commission to introduce a coordinated windfall tax on energy companies, citing rising oil prices linked to the ongoing Iran war.

In a joint letter dated April 3 addressed to European Commissioner for Climate Wopke Hoekstra, the five countries urged the development of a robust legal framework to tax extraordinary profits in the energy sector.

The initiative is backed by Spain's Economy Minister Carlos Cuerpo, alongside his counterparts Giancarlo Giorgetti (Italy’s economy and finance minister), Joaquim Miranda Sarmento (Portuguese finance minister), Lars Klingbeil (German vice chancellor), and Markus Marterbauer (Austria’s finance minister).

The top officials argue that volatility in global energy markets has created distortions that justify immediate EU-level intervention.

The proposed tax aims to ensure that the financial burden of the energy crisis does not fall solely on consumers or public finances.

They also stressed the need for political unity, stating that a coordinated European response would send a clear signal that companies benefiting from war-related price surges should help ease the economic strain on citizens.

The proposal builds on a precedent set in 2022, when the EU introduced a temporary solidarity contribution following the start of the war in Ukraine. That mechanism imposed a 33% levy on profits exceeding 20% above the average of the previous four years.

A key new element under consideration is whether profits generated abroad by multinational energy companies could be included in the tax base, aiming for a more targeted and effective capture of excess earnings.

According to the letter, revenues from the proposed levy could be used to fund relief measures for households and businesses, helping to curb inflation without increasing national deficits.

The European Commission has signaled its willingness to examine the proposal swiftly, as oil prices continue to rise amid instability in global supply routes linked to tensions with Iran.

The five countries argue that reviving a mechanism similar to the 2022 regulation would provide legal certainty and allow for rapid implementation in response to current market conditions.