Energy firms fight €2.7 billion of 2022 Dutch windfall tax

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Major energy companies in the Netherlands are lodging a series of objections against “windfall taxes” they were ordered to pay in the wake of Russia’s invasion of Ukraine in 2022.

Shell and ExxonMobil are among those demanding €2.7 billion be wiped off the €3.2 billion the state had requested after their profits shot up following the war’s outbreak, according to a parliamentary briefing on the energy markets drawn up by the finance ministry.

A total of 33 objections were filed against the one-off levy and two of the cases have already been taken to court, the briefing said. TotalEnergies declined to comment and BP did not respond questions about the objections from the Financieele Dagblad.

The tax imposed a 33% surcharge on oil, gas and refining profits that exceeded 120% of a company’s 2018–2021 average. The €3.2 billion the tax office expected to raise helped pay for help for consumers, including the €190 monthly discount on household bills in late 2022.

Pressure for a new tax

The objections complicate renewed calls for a new levy. Jesse Klaver, parliamentary party leader of the left-wing opposition alliance Progressief Nederland (formerly GroenLinks-PvdA), said on Monday that oil and gas firms should again be taxed more heavily to help households with rising fuel bills.

Finance minister Eelco Heinen, of the right-wing liberal VVD, has repeatedly warned that the windfall levy is “legally vulnerable”. The cabinet’s letter said reintroducing the measure was possible in principle, but its workability needed further review.

Why the government is hesitant

The cabinet argues there is currently little sign of windfall profits in the gas sector because prices have risen only modestly. Most Dutch crude is imported, so higher oil prices do not translate directly into local profits, though refining margins do show some sign of higher returns.

Several legal challenges to the underlying EU regulation on windfall profits are also running at European level, including one filed by ExxonMobil subsidiaries against the Council of the European Union.

Monday’s letter accompanied an almost €1 billion support package announced in response to rising fuel and energy costs linked to the conflict in the Middle East.