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13 Laws 1 (2024)

handle is hein.journals/laws13 and id is 1 raw text is: laws A MDPI -A Article Windfall Profit Taxation in Europe (and Beyond) Marco Greggi ' and Anna Miotto 2 1 Department of Law, University of Ferrara, 44121 Ferrara, Italy 2 Department of Law, University of Bergamo, 24121 Bergamo, Italy; anna.miotto@unibg.it * Correspondence: marco.greggi@unife.it Abstract: In 2022, the European Commission introduced, for the first time in its history, a windfall profit tax to be applied on excessive profits realized by qualified businesses operating in the Oil and Gas sector. Immediately after its implementation, questions arose as to its sustainability and its consistency with constitutional principles of the different member states regulating the domestic power to tax. To assess the consistency with the aforesaid rules, the article samples two countries, inside and outside the EU (Italy and Australia, respectively), and the historical precedents of the matter. Italy has been chosen due to the particularly stringent set of principles regulating the power of the legislature to tax, and Australia has been chosen because of the long-standing experience with superprofit taxes. In most of the scenarios analyzed, one common feature emerged: the complexity in defining the Extra nature of the profits and, consequently, the uncertainties in the calculation of the taxable base. In the case of Italy, for instance, the legislator had to intervene in several different moments to fine-tune the taxable base and restore certainty to the tax system. As a conclusion, while the taxation of extra profits should not per se be disregarded, its implementation demands a more robust and precise legal framework together with the understanding that the introduction of such a levy would be a one-way journey for the tax systems: windfall profits taxes would be here to stay. Keywords: windfall profit tax; excessive profit tax; EU law; ability to pay; income taxation; tax policy; European recovery plan; EU tax policy check for updates Citation: Greggi, Marco, and Anna Miotto. 2024. Windfall Profit Taxation in Europe (and Beyond). Laws 13: 1. https://doi.org/10.3390/laws3010001 Academic Editor: Patricia Easteal Received: 9 November 2023 Revised: 11 December 2023 Accepted: 15 December 2023 Published: 20 December 2023 Copyright: © 2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). 1. Introduction The explosion of the war in Ukraine prompted a fast reaction by the European Union and several countries in the world: states scrambled to help the attacked country by offering assistance and support, including significant financial aid (Umrar e a 202). As the conflict endured, the Union found itself in the unpleasant situation of needing to address the consequences of a conflict that appears more and more to be a long-standing struggle rather than a blitzkrieg. Some of these consequences include the need to find economic means to continue with the assistance and the need to curb rampant inflation originating from the increased costs of raw materials once imported from Russia. Taxation was immediately considered to be the most effective tool to address this goal. The proposal on a possible windfall tax tabled by the EU Commission (a proposal for a Council Regulation on an emergency intervention to address high energy prices, 14 September 2022, COM (2022) 473 final) has drawn the interest of academics and stakehold- ers from the very beginning (Nicolay et 1. 223; Thomas 2022) due to its innovative nature and to the policy strategy pursued. When the proposal was eventually transformed into a binding European Regulation (2022/1854) the member states of the union witnessed the rise of the first pan-European tax on the Extra profits (Margalhaes and De Lillo 2023). The charge has been applied on companies which benefited from the price dynamics of fossil fuels in recent months essentially (although not exclusively) because of the situation in the east. Some European states had already moved in this direction before the intervention by the Commission (White et al. 2022) in an attempt to collect resources for the state budget in a moment of distress for the national budgets. Laws 2024, 13, 1. https: / /doi.org/1C.3390/lawsl3ClCCCl https:/ /www.mdpi.com/journal/laws Laws 2024,13, 1. https://doi.org/10.3390/laws13010001 https://www.mdpi.com/journal/laws

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