Government to apply windfall tax on energy companies

Portugal’s minister of Finances said in Brussels today that Portugal would apply windfall taxes on energy companies in the same way it had done during the previous fuels crisis in 2022 when Russia invaded Ukraine.

“We’re going to take the measures we applied in 2022, calibrate and improve them and present our measures to (Portugal’s) parliament”, he told journalists on Tuesday. (May 5).

The minister added that the European Commission had left the decision to charge windfall taxes in the hands of each Member State.

This could bring a tax of up to 33% on surplus profits made by fossil fuel-based energy companies operating in Portugal since these are raking it in since the War in the Gulf and the closure of the Strait of Hormuz has sent the cost of a barrel of crude skyrocketing to well over US$100.

Companies in the government’s sights include Galp Energia which has enjoyed bumper revenues. As of April 2026, Galp has experienced a significant boost in performance, with Q1 2026 adjusted EBITDA rising 41% year-on-year to €943 million ($1.1 billion), driven by higher oil production and elevated prices resulting from the ongoing conflict in the Middle East.

The minister clarified that the current situation is different from that of 2022, which also saw a sharp increase in fuel prices, but without inflationary pressure, given that core inflation (excluding food and energy) remains at 2.2% or 2.3%.

“About a month ago – along with other countries, mainly Germany and Spain – we submitted a letter to the Commission stating that it should propose a tax at the European level, but if it did not, that it should leave that decision to each Member State,” recalled Miranda Sarmento, a proposal that has now been approved.

The minister also added that the countries that signed the letter should “seek to coordinate responses,” leaving the door open for other Member States that wish to join the measure.

Source: Lusa; Image: Portuguese State and Finance Minister Joaquim Miranda Sarmento (C) attends the Economic and Financial Affairs Council (ECOFIN) meeting in Brussels, Belgium, 05 May 2026. The Council is expected to agree on new rules strengthening the fight against value added tax fraud in the EU, and adopt an implementing decision approving the modified recovery and resilience plan of Denmark, among other topics on the agenda of the meeting. EPA/OLIVIER HOSLET
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