Portugal to impose tax on exceptional oil sector profits

Portugal's government has greenlit a bill to introduce a temporary solidarity contribution on the oil sector, aimed at capturing excess profits from extraction and refining companies in 2026. The initiative, approved during a cabinet meeting, intends to channel the generated revenue towards assisting families and sectors hit hardest by rising fuel prices. Additionally, the funds will support investments in decarbonizing the economy.

This move follows Portugal's call in April, alongside four other EU nations, for an EU-wide tax on exceptional profits of energy companies. The push was driven by soaring energy prices linked to the conflict in the Middle East. Finance ministers from these countries had previously highlighted the necessity of such emergency measures, referencing a similar tax implemented in 2022 to combat the energy price surge following Russia's invasion of Ukraine.

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The corresponding revenues are intended to support families and the sectors most affected by the rise in fuel prices.

The proposed bill will now be submitted to the Portuguese Parliament for further deliberation and approval. The government's decision reflects a broader European effort to address the economic fallout from geopolitical events and to accelerate the transition towards sustainable energy sources.

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They will also finance investments in 'the decarbonization of the economy'.