A law that imposes a windfall tax on profits made by energy companies as a result of big increases in wholesale gas prices as a result of the war in Ukraine has come into effect from today (2 August).

The Government expects the measure to raise between €200 million and €450 million, though it adds that his figure will depend on wholesale gas prices.

The Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Act 2023 sets out how companies will pay the tax, known as a ‘temporary solidarity contribution’.

Revenue guidance

The legislation was introduced after an EU regulation on the issue that came into force last year.

Companies covered by the legislation must:

• Register with Revenue by 30 August 2023, and
• File their return and pay the 2022 contribution to Revenue by 23 September 2023.

Revenue has prepared information and guidance on the tax, which is available on the tax authority’s website.

The temporary solidarity contribution will apply for 2022 and 2023 to companies involved in fossil-fuel production and refining.

It will be calculated on 75% of taxable profits that are more than 20% above the baseline of taxable profits for the period 2018-2021.