As people in Europe face extreme climate impacts and cost-of-living pressures in the second fossil fuel crisis in four years, while fossil fuel companies have accumulated huge profits, it is time to adopt a fair tax framework that contributes to the energy transition and raises the urgently needed resources to support households, firms and public budgets, including for international climate finance.

Rising energy prices have driven inflation and exacerbated the cost of living for the majority of households and SMEs. The high profitability of the fossil fuel sector attracts in turn investments, perpetuating a vicious circle of dependency and economic shocks for Europe.

For these reasons, a strategic discussion in the Council is needed. We believe that a first exchange of views could translate in a demand to the European Commission to:

– Monitor fossil fuel prices in real time, and publicly report on profit margins by fossil fuel companies operating in the EU on a periodic basis.

– Collect and analyse past and existing efforts to tax fossil fuel profits at national level and highlight best practices, including on revenue use.

– Explore possible tax designs, taking into account lessons learned from the 2022 Solidarity Contribution, as well as existing permanent top-up taxes on fossil fuel profits implemented in Norway and the United Kingdom.

– Explore mechanisms to prevent fossil fuel companies from shifting profit to low-tax jurisdictions, as profit shifting has been demonstrated to be very high in the fossil fuel sector, and even more prevalent in case of windfall profits. Unitary taxation of consolidated global profits should notably be explored.

– Propose ways to prevent investors’ protection provisions being used to avoid taxation of fossil fuel profits.