Analyses Economiques & Politiques • Actualités • Membres
What are Windfall Taxes ?
A windfall tax is a tax on abnormal profits companies make from unexpected events, like the COVID-19 pandemic or the Russian invasion of Ukraine, rather than from their own decisions. A windfall tax is also described as a tax imposed on exceptional profits or “windfall profits” that are generated by companies due to unplanned events like natural disasters, pandemics, or other unforeseen circumstances, rather than the actions or decisions of the company. The tax aims to redistribute these unexpected profits and is typically imposed during times of crisis.
The EU recently implemented a windfall tax on record profits in the energy sector as an emergency measure. The tax is defined as profit over 20% increase from the average taxable profits since 2018. The tax rate is left to Member States, but must be at least 33%.
What makes windfall profits unique from a transfer pricing perspective ?
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