Expatica news

Special Energy Tax must be paid – over €500 million outstanding

edpPylonAt long last, reticent energy companies who challenged the extraordinary tax contribution levied by the previous government, will have to pay up after power distributor, Redes Energeticas Nacionais (REN), lost in court.

This brings some clarity to the role of the government’s power to raise taxes and will bring welcome cash to the Treasury – over €500 million is outstanding.

In a welcome ruling for the State, the Constitutional Court has not accepted energy distributor, REN’s, argument that the special energy tax, or ‘contribution’ as it was called in 2014, was unconstitutional.

The judges considered that the tax, “is not manifestly unjust, flagrant or intolerable,” as had been claimed.

This ruling also will affect Galp Energia and, when all the non-payers pay up, the state will be over half a billion euros better off.

Data from a year ago show €520 million was in dispute by the country’s large energy companies.

The judgment from the Constitutional Court refers only to REN, but will have consequences in the cases involving both Galp and EDP which are still trying to wriggle out of the payment.

Galp, which likes to promote itself as a great Portuguese success story, has not paid a cent of the special energy tax in four years – but at least has accounted for the unpaid tax in its annual accounts.