Minister for the Environment Eamon Ryan has signed a temporary windfall tax into law which will tax energy companies on profits made in 2022 and 2023.

The Energy Windfall Gains in the Energy Sector (Temporary Solidarity Contribution) Bill 2023 will apply to the fossil fuel production and refining sector, which made significant profits due to inflated energy prices as a result of the war in Ukraine.

The temporary tax is expected to generate between €200m and €450m in income to the State and will be collected by Revenue Commissioners.

Baseline

The temporary solidarity contribution will be calculated on 75% of taxable profits, which are more than 20% above the baseline of taxable profits for the period 2018 to 2021. Taxable profits exclude losses incurred pre-2018 and post-2023.

The law comes into effect from 2 August 2023 and companies have until 30 August to register with the Revenue Commissioners.

They must file their return and pay the 2022 temporary solidarity contribution to the Revenue Commissioners by 23 September of this year.