Netherlands: Draft legislation for temporary solidarity contribution or “windfall profits tax” on fossil sector for 2022
Temporary solidarity contribution on the 2022 profits of companies engaged in crude oil, natural gas, coal and petroleum refining activities
Draft legislation for temporary solidarity contribution
The government on 1 November 2022 presented draft legislation to the Lower House of Parliament (House of Representatives) that would introduce a temporary solidarity contribution on the 2022 profits of companies engaged in crude oil, natural gas, coal and petroleum refining activities.
The intention is to apply the solidarity contribution retroactively for 2022. For 2023 and 2024, the temporary 65% “windfall profit tax” on sales of natural gas, as proposed in the memorandum of amendment to the Tax Plan 2023, would apply. Read TaxNewsFlash
- The solidarity contribution would be levied on entities subject to corporate tax that in a financial year commencing in 2022 achieve at least 75% of their net turnover with economic activities in the field of extraction of hydrocarbons, mining, petroleum refining, or the manufacture of coke oven products. For non-resident corporate taxpayers, the net turnover achieved with a permanent establishment or permanent representative in the Netherlands is used as a basis.
- The tax base for the solidarity contribution is taxable profit that exceeds 120% of the average of the taxable corporate income tax profit over the four preceding financial years. If a taxpayer is part of a fiscal unity, the taxable corporate income tax profit must be calculated as if the taxpayer is not part of the fiscal entity.
- The rate for the solidarity contribution is 33%. The solidarity contribution is not deductible for corporation tax.
KPMG observation
The temporary solidarity contribution is expected to affect only a limited number of companies (approximately 40) that are engaged in the extraction or refining of oil and gas. Other companies in the fossil sector, such as oil and gas traders and operators of solar farms, remain outside the scope of the levy.
Read a November 2022 report (Dutch) prepared by the KPMG member firm in the Netherlands
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