Corporate Tax News Issue 63 - August 2022

Energy companies subject to one-time contribution on extra profits

Italy has introduced a one-time 25% contribution on extra profits generated by certain companies operating in the energy sector. The contribution was originally proposed to be 10% but the rate was increased in Law No. 51 dated 20 May 2022. The levy aims to address the impact of the surge in gas and energy prices for businesses and consumers.

The contribution on extra profits is due by entities (regardless of whether the entity is established in Italy) that carry out any of the following activities in Italy:

  • Production and/or sale of electricity for resale;
  • Production of methane gas or the extraction of natural gas;
  • Production, distribution and trade in petroleum products; and
  • Import of electricity, methane gas, natural gas or petroleum products from other EU member states for the purpose of resale in Italy.

The taxable base of the contribution is determined by (i) the increase in the balance of active and passive transactions (net of VAT) resulting from the periodic settlement data reports (LIPE) for the period 1 October 2021 to 30 April 2022 compared to the (ii) the balance of LIPE reported for the same seven months of the previous year (i.e., 1 October 2020 to 30 April 2021). This differential (or increase) should provide a snapshot of the "extra profits" presumed to have been realised by taxable persons as a result of the general increase in the prices of energy products. An energy company is subject to the contribution on extra profits only if the “increase” exceeds EUR 5 million and is above 10%.

It should be noted that the contribution is not deductible in computing taxable business income for corporate income tax purposes or for the regional tax on productive activities.

Payment of the contribution must be made in two instalments: the first payment, which was due by 30 June 2022, had to equal to 40% of the total amount and the remaining contribution is due by 30 November 2022.

The contribution on extra profits is intended to be temporary  (i.e., only for FY 2022).

Eleonora Briolini
[email protected]

Jacopo Meregalli
[email protected]