Extraordinary measures to mitigate high energy prices
The EU Council has approved the Regulation on an Emergency Intervention to Address High Energy Prices. In addition to a binding target to reduce electricity consumption during peak times by at least 5%, it introduces two new resources for national budgets: a cap on market revenues for selected electricity producers of EUR 180 per MWh and a solidarity contribution to be paid by companies operating in the fossil sector.
The regulation establishes a mandatory cap on market revenues for electricity producers at a maximum of EUR 180 per MWh. This cap applies to market revenues generated from the sale of electricity produced from, e.g., renewable energy sources, nuclear power, crude oil, lignite, and other sources specifically listed in the regulation that benefit from low production costs compared to electricity produced from gas. The mandatory cap should apply to revenues from the sale of electricity effected from 1 December 2022 to 30 June 2023. Revenues above the cap level will belong to the state and will serve to mitigate the impact of high energy prices on end consumers.
Temporary solidarity contribution: To whom it applies and how it is calculated
The extreme growth in energy price caused by the current market situation benefits not only electricity producers but also companies and permanent establishments operating in the fossil fuel sector. If they generate at least 75% of their turnover from the extraction, mining or refining of oil, or from the production of coke products, they will be subject to a compulsory temporary solidarity contribution.
The temporary solidarity contribution will be calculated on the portion of the tax base for the 2022 and/or 2023 taxable periods that exceeds the average annual tax base determined for the four taxable periods beginning on 1 January 2018 plus 20%. The solidarity contribution shall be assessed at a minimum of 33% of this base and shall be applied over and above the corporate income tax. The proceeds shall also be used to mitigate the impact of high energy prices on end consumers.
The final version of the regulation will be published in the EU Bulletin. The rules for determining the solidarity contribution are likely to be incorporated in the Windfall Tax Act being prepared by the Ministry of Finance.