Rising energy prices since the Iran war have renewed pressure on the European Union to impose a windfall tax on oil and gas companies to fund relief for consumers. Finance and economy ministers from Austria, Germany, Italy, Portugal and Spain recently wrote to EU Climate, Net Zero and Clean Growth Commissioner Wopke Hoekstra asking for such a levy, arguing that firms benefiting from the crisis should help ease the burden on the public.
Oil majors saw big gains as supply fears grew after the conflict and the partial blockage of the Strait of Hormuz. A Guardian analysis using Rystad Energy data suggested leading oil and gas companies could collect an extra $234 billion (€200 billion) by year-end if oil averages about $100 per barrel. Firms cited among the biggest beneficiaries include Saudi Aramco, Gazprom and ExxonMobil. Reports say TotalEnergies made more than $1 billion from a speculative deal in May, and BP described Q1 2026 as “exceptional,” with profits more than doubling year-on-year to $3.2 billion.
Supporters point to Brussels’ 2022 temporary “solidarity contribution” as a precedent. That measure applied a minimum 33% surcharge on profits that exceeded a four-year average by more than 20%. The European Commission’s package of measures announced on April 22 this year aimed to reduce consumer pain but did not include a new EU-wide windfall tax.
Legal experts caution that new levies would face substantial legal hurdles. In 2022 Brussels relied on Article 122 of the EU Treaty, an emergency route that allowed the Commission to propose the measure and the European Council to adopt it by qualified majority rather than unanimity, bypassing the European Parliament. Critics highlight problems that arose in 2022: several national levies were retroactive, conflicting with the legal principle against retroactive taxation in many member states. Other concerns include unequal treatment of firms, unclear definitions of taxable profit, and questions about proportionality — all factors that make such measures vulnerable to court challenges.
Proponents say the 2022 experience demonstrates a workable path and argue EU-level action is preferable to fragmented national measures, especially for capturing profits of multinational companies. Advocates stress that coordinated action would be fairer and more effective than leaving responses to individual states.
Windfall levies have already prompted lawsuits: ExxonMobil challenged the EU measure in 2022, and Jersey-based refiner Klesch also brought legal action. Critics also warn that defining a “windfall” in volatile energy markets is difficult without penalising legitimate, long-term profits. Basing taxes on past performance can be crude, since strong recent years may simply offset earlier losses.
On effectiveness, evidence is mixed. The 2022 levies raised more than €26 billion, but some experts say this was a relatively small contribution given the scale of the crisis and caution that such measures can increase policy uncertainty, discourage investment, and risk future price effects. They recommend complementary long-term reforms — tax policies and incentives that encourage investment, boost domestic production, and diversify energy sources — to improve energy security sustainably.
Supporters concede complexity in designing legally robust and economically sensible rules, but argue windfall taxes have symbolic and practical value, especially if revenues are used to support the clean-energy transition. They describe the current period as the “messy middle” of the energy transition, when temporary measures may be needed to stabilise supplies while accelerating the shift away from fossil fuels.
Both sides agree the crisis underscores the need to strengthen EU energy security; they differ on whether the immediate priority should be temporary redistribution through windfall levies or structural tax and energy-policy reforms aimed at investment and diversification.
Edited by: Srinivas Mazumdaru