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    Home » Italy applies 50% windfall tax on energy companies’ extra income

    Italy applies 50% windfall tax on energy companies’ extra income

    November 29, 2022
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    Rome — Italy plans to apply a 50% one-off windfall tax next year on surplus income of energy companies that have benefited from the surge in oil and gas prices, a draft of the government’s 2023 budget seen by Reuters showed on Monday.

    The levy has a rate equal to 50% of the part of 2022 corporate income which is at least 10% higher than the average income reported between 2018 and 2021. It has a ceiling equal to 25% of the value of net assets at the end of 2021.

    The scheme is different from the way it was outlined by the Treasury only last week. That version envisaged a 35% tax running from January until July 2023 and calculated on energy companies’ net profit, rather than income as in the latest draft.

    By 0930 GMT, shares in ENI and Enel were down respectively around 2% and 1.7%, underperforming Italy’s blue chip index, but broadly in line with Europe’s STOXX index for the energy sector which fell 1.7%.

    Rome expects to raise around 2.565 billion euros ($2.66 billion) from the tax, which follows a framework proposed by the European Commission and replaces a similar levy in force this year which has triggered criticism and refusals to pay from multiple firms.

    Under the new terms set in the budget, which has still not been officially released, around 7,000 producers and sellers of electricity, natural gas and petrol products have to pay the amount due by mid-2023.

    Energy companies have until this Wednesday — Nov. 30 — to make the final payment on the current windfall tax, which has a 25% rate and is calculated on the value of operations subject to VAT sales tax.

    Based on the 40% down payment made by the end of August, total revenues are expected to be worth around 5 billion euros, less than half of the Treasury’s preliminary estimate.

    However, companies that miss the payments still have the opportunity to catch up by paying penalties and interest.

    Reporting by Giuseppe Fonte, additional reporting by Federico Maccioni, editing by Gavin Jones and Keith Weir – Reuters

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