Belgium: “Windfall profits tax” on electricity producers enacted

A “windfall profits tax” on electricity producers was enacted on 16 December 2022 (and became effective on 22 December 2022 following publication in the official gazette) to partly implement Council Regulation (EU) 2022/1854.

• The tax is levied at 100% on market revenues obtained between 1 August 2022 and 30 June 2023 from the sale of electricity generated with specific (inframarginal) technologies and injected in the grid or a direct line at a price exceeding 130 €/MWh.
  • When electricity is generated from solid and gaseous biomass fuels and the incineration of urban waste, the cap is 180 €/MWh.
  • When the electricity production installation is benefiting from a production support scheme that varies depending upon the evolution of the electricity market price, the cap is 130 €/MWh or the levelized cost of energy (LCOE) + 50 €/MWh (when the result is higher than 130 €/MWh but with a maximum of 180 €/MWh).
• Electricity generated in Belgium from nuclear power, solar energy, wind energy, geothermic energy, biomass fuels (excluding biomethane), and combustion of waste are all in scope of the levy. However, the levy does not apply to producers generating electricity with power-generating facilities with an installed capacity up to 1 MW.
• Market revenues relate to any sales, irrespective of the form and through any channel, including retail or wholesale supply, sales on electricity exchanges (day-ahead, intra-day), sales on balancing markets or bilateral sales via corporate or merchant power purchase agreements.
• To collect the levy, a declaration is to be filed via an electronic platform, made available since 28 February 2023 on the website of the Belgian Commission for Electricity and Gas Regulation (CREG).
  • The CREG will audit the declaration and will formulate a proposal of levy to the Federal Public Service (FPS) Economy who will establish the levy and will send a payment order to the taxpayer. 
  • The first declaration, covering the period 1 August 2022 - 31 December 2022, is to be filed by the taxpayer with the CREG by 30 April 2023 at the latest.
  • The declaration model for the period 1 January 2023 - 30 June 2023 must be established by the CREG by 7 July 2023 at the latest. This declaration is to be filed by 7 September 2023 at the latest. The CREG audits the declaration and proposes by 31 December 2023 at the latest the amount of the levy due by the taxpayer to the FPS Economy, which sends the payment order.
  • If the declaration is not filed within the due deadline, or when not all information is provided to determine the surplus of market revenues, the CREG can propose to establish the levy on an ex officio basis. In the framework of the levy, the CREG has specific investigative powers and can impose administrative fines and enforcement penalties in case of non-compliance.
  • In the case of late payment of the levy, late payment interest applies, and any outstanding amount is collected by the FPS Finance in accordance with the rules of (enforced) collection of tax and non-tax debts provided in article 3 of the “Domanial” Law of 22 December 1949. This recovery procedure will have the same characteristics as the recovery procedure for unpaid VAT sums.
  • Any excess payment will be refunded upon request, but a request for refund must be made on time (within six months of the receipt of the payment order sent by FPS Economy) with the FPS Economy. After a timely request for refund, the legal claim for reimbursement of the levy expires after five years.
• The levy is a deductible expense for income tax purposes and cannot be recharged directly or indirectly to other companies or end users.

Council Regulation (EU) 2022/1854 provides for a windfall profits tax applicable as from 1 December 2022, but the Belgian windfall profits tax applies from 1 August 2022 to 30 June 2023. An extension may be adopted in the event of a prolongation of Council Regulation (EU) 2022/1845.

Read a March 2023 report prepared by the KPMG member firm in Belgium