- The European Union is examining a bloc-wide windfall tax on oil and gas companies as soaring energy prices increase household bills.
- EU climate and taxation chief Wopke Hoekstra says officials must assess legal risks following challenges to the bloc’s 2022 levy.
EU Reviews New Windfall Profit Tax
The European Union is considering a windfall profit tax on oil and gas companies as governments seek funding to ease rising energy costs. EU Tax Commissioner Wopke Hoekstra told Reuters on October 12 that the European Commission would establish a working group to examine the proposal.
Oil and gas companies have recorded higher profits in 2026 as energy prices surged during the US-Israeli war with Iran. Disruptions to shipping through the Strait of Hormuz and Iranian attacks on Gulf neighbours have intensified supply concerns.
Hoekstra said rising energy bills had placed significant pressure on households, particularly vulnerable citizens. He criticised companies that benefit from global instability without providing additional goods or services.
“Citizens, and particularly vulnerable citizens, are confronted with dramatic increases in their energy bills,” Hoekstra said. He added that some companies were gaining “truly excessive benefits” from the crisis.
Energy Prices Drive Calls for Higher Taxes
Brent crude futures climbed to nearly $120 per barrel in late April. Prices remained more than 70% above their level at the start of 2026, boosting profits for oil producers and refiners.
Germany, Spain, Portugal, Italy, Poland and Austria have urged the EU to examine a bloc-wide levy. Supporters argue that taxing extraordinary profits could help governments finance relief measures as consumers face higher energy costs.
Hoekstra said many citizens and politicians supported the principle behind the proposal. However, the Commission must assess the potential benefits and drawbacks before deciding whether the measure is viable.
Legal Challenges Complicate the Proposal
The EU introduced a windfall profit levy in 2022 after Russia’s invasion of Ukraine triggered a sharp rise in energy prices. The scheme imposed a minimum 33% levy on surplus profits from oil, gas, coal and refining companies.
The levy applied to profits exceeding 20% above a company’s average earnings from previous years. A European Commission report estimated that the measure raised nearly €29 billion.
However, companies including ExxonMobil challenged the scheme in court. Several legal cases remain unresolved, creating uncertainty around a potential new levy.
“We’re still litigating court cases from the decision in 2022 to do something similar,” Hoekstra said. He stressed that the Commission must consider those legal disputes when assessing a new proposal.
Member States Pursue National Levies
Some EU countries have already introduced national taxes on extraordinary energy profits. Portugal, for example, approved a 33% levy on exceptional profits earned by oil and refining companies in 2026.
A bloc-wide approach could create a common framework across member states. However, the Commission must first evaluate its legal basis, financial implications and potential effects on energy companies.
The proposed tax remains under consideration. Hoekstra’s planned working group will examine its merits and risks as EU governments seek ways to protect consumers from rising energy bills while navigating ongoing legal challenges.