International Tax Panorama

Portugal’s EDP Renewables will take legal action against Romania and Poland where it operates 521 MW and 697 MW of renewables capacity respectively, over a new energy tax which could end up applying to unrealised profits.

In order to comply with an European Union Council request for an emergency intervention to address high energy prices, governments in Romania and Poland have recently introduced emergency clawback mechanisms to restrict the revenues earned by renewable energy producers and other market participants. For instance Romania applies a 100% tax on revenues over 450 lei ($96/ 91 euro) per MWh as well as a withholding tax on behalf of offtakers.

EDP considers that these new legislations in Romania and Poland do not follow the European Union Council principle of clawing back only realized market revenues as both ignore financial hedges in place within EDP. In the company’s view, the new taxes may result in the cancelation of the effects of the existing risk management strategies legitimately implemented by renewables producers and will result in taxation of unrealized profits, clearly against the regulation principles.

This non consideration of financial hedges can result in unreasonable payments and potential costs estimated at €0.3 Bn in 2023