Fuels: advance tax on dividends from major energy companies
The Council of Ministers has given the go-ahead for an advance payment on profits due to be distributed by major energy groups to fund the new extension on diesel. There are also tighter restrictions on sponsorship of legal gambling.
Key points
The government is turning to the major energy companies to raise further funds to tackle high fuel prices. Thus, the decree approved yesterday by the Council of Ministers – which contains the thirteenth extension of the excise duty cut, extended until 5 September (see further report on this page), targets energy groups, which are being asked to pay a 39 per cent advance tax on profits whose distribution has been approved for the 2025 financial year.
Who is paying for the new excise duty cut
The measure will apply to major players in the sector which, as of the 2025 financial statements, have generated revenues in excess of 20 billion euros and which, as stated in the provision, ‘carry out, either directly or through companies included within the scope of consolidation, engage in the extraction, production, definitive import or introduction into the territory of the State from other European Union Member States, refining, processing, storage, transport, distribution, marketing or sale of crude oil, petroleum products, natural gas (including liquefied natural gas) or other energy products, as well as electricity’.
Measure agreed with the groups involved
This is a particularly broad scope which, according to government sources yesterday, would have been defined in agreement with the groups involved, and which makes it possible to resolve, at least for now, the resource conundrum after Brussels, as is well known, rejected the proposal for European action on oil companies’ windfall profits in recent days. It is, however, an issue on which the government remains determined to press ahead, joining forces with other countries.
How the mechanism works
Returning to the measure, along the same lines as what has already happened with the banks, the sums advanced become a tax credit that can be used to reduce withholding tax and substitute tax applied to profits subject to the advance payment mechanism. Article 2 of the decree clarifies that the tax credit does not form part of taxable income. And if this credit exceeds the amount due on profits, the surplus may be used to offset other liabilities.
Amendments to the Tuir
The legislation also provides for an amendment to the Consolidated Income Tax Law (Tuir), introducing a 39 per cent advance tax on dividends in the new Article 55 bis. This advance payment must be made by 30 November each year: as drafted, the legislation would therefore appear to introduce a permanent levy rather than an emergency measure.
