Simon Harris Opposes Domestic Windfall Tax on Energy Companies, Prefers EU Approach

Finance Minister Simon Harris has indicated the Irish government's preference for a coordinated EU-wide approach over a domestic windfall tax on energy companies making exceptional profits. Responding to Pearse Doherty, Harris stated that while the EU Commission allows individual approaches, no EU-wide agreement exists, and a state-by-state approach risks fragmenting the single market for electricity.

Harris noted the financial pressure on households and businesses but warned that individual Irish action could impact investment, market behavior, and energy supply. Doherty criticized this, accusing Fine Gael and Fianna Fáil of protecting energy companies' profits despite EU approval for such taxes. In 2025, Bord Gáis Energy reported over €72 million in operating profit, and ESB reported €636 million in profit.

Portugal is drafting a bill to temporarily tax energy firms' excess profits. Five EU member states (Germany, Italy, Spain, Portugal, Austria) wrote to the European Commission in April, urging swift development of an EU-wide instrument to tax windfall profits, arguing it would ease the burden on the public. They also called for measures beyond the 2022 and 2023 Temporary Solidarity Contribution (TSC), which taxed energy producers on windfall profits from the energy crisis.

In 2023, new EU regulations mandated member states to claw back excess profits, which Ireland implemented via the Energy (Windfall Gains in the Energy Sector) Act. This applied a 75% charge on profits exceeding 20% of the 2018-2021 average for upstream oil, gas, and electricity generators. ESB, SSE, Energia, Vermilion Energy Ireland, and Nephin Energy were taxed through the TSC.

European Economic Commissioner Valdis Dombrovskis noted last month that member states could improve measures to capture excess profits but stated the Commission is not recommending new EU initiatives due to mixed results from previous windfall taxes. In 2023, Ireland collected €350 million through windfall taxes, combining the TSC with an electricity revenue cap and other charges.