Portugal approves 33% windfall tax on oil profits

Portugal’s government has approved a bill creating a temporary solidarity levy on the oil sector, imposing a 33% tax on excess profits from oil extraction and refining in 2026. The move matters for energy companies and investors because it would directly affect profits in Portugal’s petroleum sector and channel revenue into support measures and energy transition spending.

According to the government, the tax will apply only to 2026 and will be charged on the share of relevant profits that exceeds by more than 20% the average profits recorded in 2024 and 2025. The Finance Ministry said the levy must be assessed and paid by the end of September 2027.

The government said the measure responds to the sharp rise in costs faced by households and companies after instability in international energy markets linked to the war in Iran pushed up fossil fuel prices. It argued that oil extraction and refining activities had posted extraordinary profits resulting exclusively from external market conditions.

The revenue is intended to support families and sectors most affected by higher fuel prices and to finance investment in energy efficiency and the decarbonisation of the economy. Portugal’s executive also becomes the first among the five countries that wrote to the European Commission in early April to advance with a concrete proposal for such a tax.

Originally published at Eco.pt