A windfall tax levied on the extraordinary profits of major energy corporations following Russia’s invasion of Ukraine has yielded significantly more revenue for the German state than initially projected. A letter from the Federal Ministry of Finance, obtained by Green Party parliamentarian Katharina Beck and reported by the “Süddeutsche Zeitung”, reveals the unexpected financial windfall.
Between 2022 and 2023, the tax impacted 13 companies annually. These firms reported €1.983 billion and €465 million in tax payments respectively. While the initial legislative expectation was for total revenues of just over €1 billion, the actual figures have surpassed this considerably. The tax application to two companies was temporarily suspended, amounting to a combined €160 million and €106 million respectively.
“Through the EU energy crisis contribution, we were able to capture nearly €2.5 billion of crisis-linked windfall profits in the oil and gas sector, undoubtedly generated following Russia’s aggression” stated Katharina Beck. “This is an important success and demonstrates that the windfall tax instrument can make a fair contribution during exceptional market phases.
The issue of windfall taxes is currently resurfacing in Berlin, shifting focus to the arms industry. As Germany and Europe dramatically increase defense spending, arms manufacturers are not only securing contracts but also grappling with escalating product prices due to high demand and limited suppliers.
The previously implemented windfall tax targeted corporations in the crude oil, gas, coal and refining sectors, which benefited from the abrupt surge in energy prices after the Russian invasion, generating supplementary profits in the triple-digit millions. These companies were required to pay an additional 33% tax on “excess revenues” exceeding the average of previous years by more than a fifth. While formally referred to as the “EU energy crisis contribution” the term “windfall tax” was actively rejected by then-Finance Minister Christian Lindner (FDP), despite its practical application and eventual EU-wide mandate. The renewed debate raises questions about the government’s commitment to equitable taxation and the potential for expanding windfall levies to other sectors enjoying exceptional circumstances.