On 18 November 2022, the Austrian federal government reached an agreement on how it intends to implement a temporary windfall tax on Austrian energy companies. The windfall tax would be levied on profits generated in 2022 and 2023 that are deemed to be “excessive” and the tax rate would reach 40% for oil and natural gas companies. The Austrian tax, which would implement the recent EU regulation in this area, is expected to be enacted by the end of 2022. (See the August and November issues of BDO’s Corporate Tax News for analyses of recent windfall taxes in other countries.)
The EU regulation, which applies as from 8 October, contains emergency provisions to address soaring energy prices across the EU by introducing measures to reduce the demand for electricity and redistribute surplus revenues derived by energy sector companies to final consumers. The regulation (i) imposes a temporary solidarity contribution tax on excess profits generated by fossil fuel companies; (ii) requires member states to reduce their gross electricity consumption by 10% and at least by 5% during certain peak hours (during the period 1 December 2022 and 31 March 2023); and (iii) imposes a cap on certain electricity generators.
Austria’s windfall tax would apply to fossil energy producers, i.e., producers and traders in the oil and gas sector and electricity-generating or trading companies:
Despite the political agreement reached on the windfall tax, it is possible that the measures may be revised during the legislative process.