Spain's government has agreed to extend its temporary windfall tax on energy companies beyond its scheduled expiration on December 31, 2024, as part of a deal to secure votes for the new fiscal plan in Congress.
The tax, introduced during the energy crisis, has been a point of contention, with negotiations led by the hard-left Podemos party, which insisted on its continuation as a condition for supporting the fiscal plan.
The tax, currently levied at 1.2% on revenues exceeding EUR 1 billion from 2022 to 2024, applies to energy companies regardless of whether they use renewable or fossil fuels. However, exemptions will likely be included for investments in decarbonization, with Podemos pushing for minimal exemptions to ensure the tax remains effective.
The approval of the fiscal plan passed with 178 votes in favor, 171 against, after last-minute concessions were made to Catalan and Basque parties, who were concerned about discouraging clean energy investments in their regions.
Despite resistance from major oil and power companies like Iberdrola, Endesa, and Repsol, which warned that the tax would jeopardize significant energy transition investments, the government has committed to drafting a new energy tax law by the end of 2024.
