Spain slaps windfall tax on power companies

• Spain will present a windfall tax on power companies as well as financial institutions from next year to fund measures made to assist Spaniards manage rising inflation.

Annual revenue from the tax on amazing profits of huge electricity, oil and gas companies in 2023 as well as 2024 will be EUR2 billion (US$ 2 billion), Prime Minister Pedro Sánchez told parliament in a state of the nation address the other day.

The measure will come into effect from 1 January 2023 as well as put on amazing profits secured by companies over 2022-- 2023.

Additionally announced was a windfall tax on banking entities that will last for two years and also is expected to elevate EUR1.5 billion per annum.

"This federal government will not tolerate that there are companies or people that capitalize on the dilemma to collect wide range at the cost of the majority," Sánchez said.

Inflation, he discussed throughout the speech, is currently the primary difficulty dealing with Spain as well as most globe economic climates.

Funds increased will certainly be made use of to provide free travel on commuter trains between September and also December as well as construct new residences in Madrid, to name a few measures.

The policy comes after Spain's government introduced a mechanism in 2015 to limit windfall profits of renewables plants projects with a capacity more than 10MW that sell power on the merchant market.

On top of that, industry teams advised last month that a proposed law in Spain that is developed to claw back revenues from emissions-free power plants would develop threats for renewables investors.

According to a letter sent to the European Union by profession bodies such as Eurelectric and also WindEurope, Spain's government has relaunched the legislative procedure on the draft legislation for a new law that will lower the revenues of non-CO2-emitting generation facilities mounted prior to 2003. The draft law, they stated, "seriously threatens financial investment rewards" for decarbonised electricity generation.

Renewables asset owners in Italy have actually additionally been hit by measures to claw back profits coming from high electrical power rates. The country's federal government introduced in January it would certainly restrict the windfall profits of some feed-in tariff-backed PV projects as part of a policy that is influencing over half of the nation's solar fleet, according to one estimate.