Banking and energy sectors challenge new provisional tax
Energy giants and large banks oppose the proposed provisional tax that would demand 7,000 million euros over two years. The government plan targets net commissions and interest of financial institutions with annual revenues above 800 million, taxing them at 4.8%, and electricity companies earning over 1,000 million in turnover at 1.2%.
As reported by El Periódico de España, the bill, filed by the PSOE and United We Can, started parliamentary consideration to fund measures that ease the impact of inflation on homes and businesses during the energy crisis. Major players in electricity and oil warn that the tax could dampen sector investment.
Bank condemns tax for potentially slowing economic recovery
Major electricity groups under the Aelec umbrella, including Iberdrola, Endesa, and EDP, argue that the tax is unfair because it taxes profits that do not reflect extraordinary gains, potentially weakening renewable distribution projects that require large investments and risk harming overall economic activity and employment. Aelec notes that added tax uncertainty undermines partners’ ambitious investment plans to accelerate decarbonization and cautions that it would increase dependence on fossil fuels from abroad. The move appears to contradict goals of deploying renewable energy in the electricity system and supporting the energy transition.
AOP, which groups large oil companies such as Repsol, Cepsa, BP, Galp, and Eni, warns that the industry’s resources are essential to sustain investment despite regulatory uncertainty. It emphasizes that billions of euros in refineries and related projects are needed to reach climate neutrality and preserve industry and jobs. The association argues that stable frameworks and a coherent energy transition design are necessary to keep these investments on track and ensure fair competition among energy alternatives.
No extra benefits?
Iberdrola and Endesa, the two largest electricity companies in the country, used their midyear results announcements to tell the government that they see no additional benefits from the tax. They argue the government seeks to curb large corporate gains during the energy crisis and price surge, though both firms report profits have declined in the Spanish market this year. Electricity companies insist they have not benefited from extraordinary state aid, pointing out they have been selling electricity generation at prices well below market expectations and not profiting from the price spikes.
Aelec stresses that the energy crisis has driven costs up sharply, squeezing margins. It contends that a tax based solely on income, without considering costs, would erode profits without raising margins. The proposed levy would also affect regulated activities, such as distribution networks where rates and margins are set by the government and are not driven by market conditions.
The oil sector body argues that the government’s decision to tax unexpected earnings is arbitrary and unfair. It contends profits are cyclical and driven by market conditions and the investments undertaken at risk. He notes that profits once seen as extraordinary in the current cycle were extraordinary losses in 2020, and taxing today’s gains without relief for past losses makes little sense.
In the same context, Iberdrola suggested that gas and oil companies have benefited during the crisis, while integrated electricity providers did not. The company’s president, Ignacio Sánchez Galán, spoke at a conference where analysts mentioned competitors such as Naturgy and Repsol, stating that electricity and gas sectors are not in identical positions and that no extraordinary advantages exist.
Repsol and the rule of law
Repsol, Spain’s leading oil company now expanding into multi-energy activities, vowed to resist any arbitrary measure that might affect the group. Its CEO, Josu Jon Imaz, expressed confidence in Spain’s constitutional framework and European legislation to safeguard business operations from unwarranted interference, emphasizing the importance of a stable legal environment within the European market.
Banking and credit shock
Banking associations, including AEB and CECA, present a united front to warn the government that the new tax would not help fight inflation and could slow economic recovery and job creation by hindering corporate lending. Unions estimate that the measure would constrain credit and alter risk decisions within banks, reducing competitiveness in the single European market. Santander has projected a potential credit contraction of up to 50 billion euros in Spain over the two years the tax would be in effect.