Windfall tax costs Galp €200M-€330M

 In Energy, Gas and Petroleum, News

CaixaBank BPI Equity Research has estimated that the tax on windfall profits made by Portuguese energy company Galp — profits made as a result of the energy crisis rather than from ordinary business expansion or trading under normal circumstances — could cost it over €200 million or the equivalent of 4% of its capital stock.

The research has suggested that impact could cost Galp €220 million at the lower estimate and €330 at the higher estimate in terms of its profits, but despite the government’s decision to charge the company a windfall tax, its share value was up 3.41% in accordance with the tax applied (33% and 50% respectively).
The estimate from Pedro Alves, analyst at Caixabank BPI Equity Research, was sent – together with an explanatory note – on Wednesday to its clients reviewing the petroleum and gas producers target share price from €13.9 to €11.4.
The Windfall Tax will have an equivalent impact on share capitalisation of 3% if the tax is applied at 33%. If the tax applied is at the higher rate of 50%, Galp’s accounts will take a hit representing 4% of its share capital.
The Government’s decision on the windfall tax came days before the 27 EU heads of state and government met in Brussels for a two-day summit with one topic topping the agenda: the energy crisis this week
The debate will focus on a new package of emergency measures unveiled earlier this week by the European Commission, which includes the layout of what might soon be the first-ever EU-wide cap on gas prices. The cap would act as an emergency ceiling to contain episodes of extreme volatility and circulation.
“The time has come,” Commission President Ursula von der Leyen said while unveiling the package.