Government publishes legislation for windfall tax on energy companies 

The Government plans to pass the Bill through the Oireachtas after the summer recess. 

The Government has published new legislation to introduce a windfall tax as well as revenue caps on energy generation companies that have been making massive profits since the outbreak of the war in Ukraine last year.

On Friday, Environment Minister Eamon Ryan published the Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Bill 2023.

Between the two measures, the department estimates that it could raise between €280m and €600m. 

That includes between €200m and €450m will be raised from the “temporary solidarity contribution” with between €80m and €150m raised through the revenue caps.

This money will in turn be put towards financial supports to households and businesses affected by high energy prices or used to support investment in areas such as renewable energy. 

Budgetary process

The Government will determine how best to distribute these proceeds later this year as part of the budgetary process.

Mr Ryan said the intention is to bring the bill to Government next month and pass it through the Oireachtas after the summer recess.

The contribution will be calculated based on a portion of a company’s taxable profits. 

Profits which are 20% above the baseline will be exempt from the contribution with all subsequent profits subject to a 75% tax.

The baseline will be the average taxable profits for the company for the period 2018 to 2021.

The contribution will be administered by the Revenue Commissioners.

The bill will also introduce a cap on market revenues. Oil-fired and coal-fired generation is at least €180 per MWh which is high enough to collect windfall gains while ensuring this generation continues to operate and provide security of supply.

The cap stands at €120 per MWh for wind and solar. The cap will be administered by the Commission for Regulation of Utilities (CRU).

The timelines for companies to make formal declarations and payments to the CRU will be adjusted when the Bill is enacted later this year.

However, the provisional dates are November 30 for the submission of formal declaration, and December 31 for payment.