Update 1 September 2022 - Meanwhile, various media have leaked that the government recently agreed to increase the specific mining levies by EUR 2 billion. Further details, such as how this will be implemented, are still missing. These will probably follow on Budget Day 2022.
On 1 July 2022 the Dutch government sent a letter to parliament as a response to questions raised about a possible windfall tax for energy companies. The letter discusses both electricity producers as well as oil and gas producers. For the energy companies as a whole the letter indicates that implementing a windfall tax is not possible in the short term. This group is too diverse and may include companies that are profitable for other reasons such as a sale of a division or are not profitable at all. For instance, electricity producers with gas power plants are faced with high gas prices and may be in financial difficulties themselves. Furthermore, a legal basis for a general windfall tax is currently lacking and creating one would lead to questions of demarcating what exactly can be considered a windfall profit.
However, with respect to oil and gas producers the letter refers to the specific levies in the Netherlands that are only applicable to holders of production licenses for oil and gas, the most relevant one of which is the so-called state profit share. An increase of these levies would only affect these producers. The letter indicates that the government will review whether an increase of these levies is possible but points out to a specific provision of law which intends to give production license holders certainty about these levies for the duration of the license. This provision would need to be temporarily suspended in order to increase the levies. It is pointed out that this poses legal questions, for instance from the perspective of legal certainty, and may negatively affect the investment climate in the Netherlands. Recent statements by cabinet members in media imply that the government is reluctant to pursue an increase of these levies, as the total tax burden for oil and gas companies generally already exceeds 70%. However, it is possible that – as a result of public pressure – Dutch parliament may still force such an increase. Another possibility is that has been mentioned is a general increase of the corporate income tax rate, which would not be limited to energy companies.
Parliament is currently in recess but will return early September. It is likely that the result of the review for an additional levy for oil and gas companies will be published around Budget Day on September 20th. We will keep you posted if any new developments occur.