Portugal to seek approval for windfall tax on energy firms

Portugal’s government will seek parliamentary approval in the coming weeks to introduce a windfall tax on energy companies benefiting from rising prices linked to the war involving Iran, Finance Minister Joaquim Miranda Sarmento said on Tuesday, May 5.

The move follows broader discussions at the European level. In April, Portugal joined Germany, Italy, Spain and Austria in sending a letter to the European Commission calling for a coordinated windfall tax across the bloc. However, Brussels ultimately left the decision to individual member states.

Miranda Sarmento said Portugal intends to coordinate closely with other countries as it develops its approach. Portugal “would seek the highest possible level of coordination” with partners and “learn from each other about potential measures that each may be preparing,” he said.

Outlining the government’s plans, the minister added: “We will take the measures adopted in 2022, recalibrate them, improve them and, in the near term, present a proposal to parliament,” referring to steps taken during the previous energy price surge following Russia’s invasion of Ukraine.

He noted that the current economic context differs from 2022, pointing out that inflationary pressures are now significantly lower. Core inflation, which excludes food and energy prices, is currently running at around 2.2%, he said.

Although the centre-right government does not hold a parliamentary majority, the proposal is expected to pass with support from the Socialist Party, which originally introduced the windfall tax mechanism in 2022.

By Tamilla Hasanova