Italy to raise billions with windfall tax on energy companies

Robert Besser
30 Nov 2022, 16:21 GMT+10

Italy plans to charge energy companies that have benefited from the surge in oil and gas prices with a 50 percent one-off windfall tax on profits next year
The levy has a rate equal to 50 percent of their 2022 corporate income, some 10 percent higher than the average income reported between 2018 and 2021
It also has a ceiling equal to 25 percent of the value of net assets at the end of 2021

ROME, Italy: A draft of the government's 2023 budget seen by Reuters indicates that Italy plans to charge energy companies that have benefited from the surge in oil and gas prices with a 50 percent one-off windfall tax on profits next year.

The levy has a rate equal to 50 percent of their 2022 corporate income, some 10 percent higher than the average income reported between 2018 and 2021. It also has a ceiling equal to 25 percent of the value of net assets at the end of 2021.

After the release, shares in ENI and Enel were down some 2 percent and 1.7 percent, respectively, below Italy's blue chip index, but broadly in line with Europe's STOXX index for the energy sector, which fell 1.7 percent.

Rome expects to raise some $2.66 billion from the tax, which replaces a similar levy in force this year that caused criticism and refusals to pay from multiple firms, and follows a framework proposed by the European Commission.

Under the new terms, some 7,000 producers and sellers of electricity, natural gas and petrol products must pay the amount due by mid-2023.

Energy companies have until 30th November to make the final payment on the current windfall tax, which has a 25 percent rate and is calculated on the value of operations subject to the VAT sales tax.

Based on the 40 percent down payment made by the end of August, total revenues are expected to be worth around $5 billion, which is less than half of the preliminary estimate of the Treasury.

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