{"id":57642,"date":"2026-07-06T10:52:53","date_gmt":"2026-07-06T10:52:53","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&p=57642"},"modified":"2026-07-06T10:52:53","modified_gmt":"2026-07-06T10:52:53","slug":"the-solidarity-tax-in-the-context-of-the-energy-crisis-friend-foe-or-accomplice","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/the-solidarity-tax-in-the-context-of-the-energy-crisis-friend-foe-or-accomplice\/","title":{"rendered":"The Solidarity Tax in the Context of the Energy Crisis\u2014Friend, Foe, or Accomplice?"},"content":{"rendered":"

Authored by Roman Bradu, Managing Partner and Noemi C\u0103dariu, Managing Associate<\/p>\n

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  1. Contextual Introduction<\/strong><\/li>\n<\/ol>\n

    The current energy crisis originated among the consequences of the COVID-19 pandemic in late 2021, when most European countries simultaneously faced both a shortage of resources (fuel, crude oil, natural gas, and electricity) and an unexpected surge in their prices. Naturally, although the crisis was driven by a number of economic factors, the main factors were (i) the rapid<\/em>post-COVID-19 economy, which outpaced the energy supply capacity of major market suppliers, as well as (ii) the severing of the European Union\u2019s relations with Russia, as a direct consequence of the political context created by the armed conflict between Russia and Ukraine\u2014depriving the EEA of one of its largest energy suppliers up to that point.<\/strong><\/p>\n

     <\/p>\n

    In this context, energy prices rose dramatically in a relatively short period of time, with crude oil reaching an all-time high (ATH) for the first time since 2008. Europe found itself in an extremely vulnerable position, given that our primary source of gas supply was Russia, resulting in economic growth that fell far short of projections due to the inability of both individuals and businesses to bear the costs of energy inflation.<\/p>\n

     <\/p>\n

    Since all Member States have been negatively affected by the current energy crisis, the European Union has faced pressure from both individuals and, in particular, from SMEs to provide solutions to energy inflation, in the form of state aid to cover these costs without directly leading to the impoverishment of the population, the bankruptcy of companies, and, consequently, the slowdown or collapse of the economies of Member States.<\/p>\n

     <\/p>\n

    The EU has taken the view that the response to the energy crisis must be unified <\/u>and well-coordinated <\/u>at the Member State level, within a pre-established framework, since uncoordinated and unaligned national measures could create the conditions for destabilizing the internal energy market, jeopardizing security of supply, and thereby leading to additional inflation in the Member States most severely affected by the crisis.<\/p>\n

     <\/p>\n

    Consequently, it was deemed appropriate to take exceptional, temporary measures <\/strong>by introducing a solidarity levy <\/strong>on EU companies and permanent establishments operating in the crude oil, natural gas, coal, and refining sectors, in an effort to mitigate the direct economic effects of rising energy prices on public budgets, end consumers, and companies within the Union.<\/p>\n

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    1. Trends in European Legislation<\/strong><\/li>\n
    2. The Legal Framework Established by the European Union<\/strong><\/li>\n<\/ol>\n

      The solidarity contribution was conceived as an appropriate means of addressing windfall profits in the event of unforeseen circumstances[1]<\/strong><\/a><\/em> . Thus, it was considered that the profits earned by Union companies and permanent establishments operating in the crude oil, natural gas, coal, and refining sectors could not have been achieved under normal conditions <\/u>had the unforeseeable events in the energy markets not occurred. Furthermore, the main causes that led to the disruption of the energy markets (i.e.<\/em>, the COVID-19 pandemic and the armed conflict in Russia and Ukraine<\/em>) are also considered to be unforeseeable and extraordinary events.<\/p>\n

       <\/p>\n

      Thus, without substantially changing their cost structure or increasing their investments, companies in Member States, as well as their permanent establishments that generate at least 75% of their revenue from activities in the crude oil, natural gas, coal, and refining sectors have seen an increase in profits due to the sudden and unforeseeable circumstances of the armed conflict between Russia and Ukraine, the reduction in energy supplies, and the increase in demand resulting from extremely high temperatures.<\/p>\n

       <\/p>\n

      Consequently, the introduction of this solidarity contribution is viewed as a joint, coordinated, and contextually necessary measure that enables the generation of additional revenue at the national level, with the aim of providing financial support to households and businesses severely affected by rising energy prices, under fair competitive conditions throughout the Union. The contribution is intended to serve as a redistributive measure to ensure that companies falling within its scope (companies that have earned windfall profits as a result of unforeseen circumstances<\/em>) contribute proportionally to addressing the energy crisis in the internal market.<\/p>\n

       <\/p>\n

      The basis for calculating the solidarity contribution is the taxable profits of companies and permanent establishments that are tax residents in the EU, in the crude oil, natural gas, coal, and refining sectors, as defined in bilateral treaties or in the national tax laws of Member States for the fiscal year beginning on January 1, 2022, and\/or January 1, 2023, or after those dates, and for their entire respective duration. The fiscal year is determined by reference to the rules in force under the national laws of the Member States.<\/p>\n

       <\/p>\n

      According to the regulation, only profits earned in 2022 and\/or 2023 that exceed a 20% increase in average taxable profits <\/u>generated over the four fiscal years beginning on or after January 1, 2018, will be subject to the solidarity contribution. The rationale behind this provision is to ensure that a portion of the profit margin\u2014 namely that which is not attributable to unforeseeable developments caused by the aforementioned un <\/em>d circumstances<\/em>, can be used by EU companies and their permanent establishments for future investments or to ensure their financial stability during the current energy crisis, including for energy-intensive industries.<\/p>\n

       <\/p>\n

      The Union recommends that the solidarity contribution be used for:<\/p>\n