A New 33% Windfall Tax Will Hit Oil Companies' Excess Profits for 2026

Portugal is preparing to take a one-off bite out of the oil industry's most profitable year. The Conselho de Ministros (Council of Ministers) has approved a new levy — the Contribuição de Solidariedade Temporária sobre o Setor Petrolífero (Temporary Solidarity Contribution on the Oil Sector) — that will tax at 33% the slice of a company's 2026 profits that runs more than 20% above what it earned, on average, in 2024 and 2025. It is a windfall tax in all but name, aimed squarely at the years in which energy prices have swung hardest.

The design matters as much as the headline rate. Nothing is taxed on the first fifth of profit growth over the two-year baseline; only the excess beyond that threshold is caught, and only for the 2026 financial year. The contribution is explicitly temporary — a single application rather than a permanent surcharge — and companies will assess and pay it by the end of September 2027, once their annual accounts are closed. It reaches the firms that extract crude and those that refine it, the parts of the chain where unusually high margins tend to accumulate when world prices spike.

Behind the measure is a familiar political calculation. Fuel costs have been a persistent grievance for Portuguese households and hauliers through a summer of volatility driven largely by tensions in the Middle East, and governments across the European Union have reached for windfall levies as a way to claw back part of the gains without touching prices at the pump directly. Lisbon is now following that path, betting that a narrowly drawn, time-limited contribution will survive both the politics and any legal challenge from the sector.

The revenue is not destined for general spending. Under the plan, the money raised will be ring-fenced for two purposes: cushioning the impact of fuel-price rises on the most vulnerable families and businesses, and financing measures that reduce the country's dependence on fossil fuels. In other words, the profits of a high-price year are meant to help pay for softening the blow of high prices — and, over the longer term, for weaning the economy off the very product being taxed.

How much the contribution will actually collect is uncertain, because it depends entirely on how 2026 profits compare with the 2024–2025 average. If margins ease over the rest of the year, the base could prove modest; if they stay elevated, the take could be significant. Either way, the mechanism has the political advantage of scaling automatically with the industry's fortunes — the better the year for oil companies, the larger the contribution they owe.

For consumers, the levy changes nothing at the forecourt in the short term: it is a tax on corporate profit, not on litres sold, and it will not be assessed until well into 2027. Its significance is more strategic. It signals that the government intends to treat exceptional energy-sector profits as a shared resource in years of turbulence, and to funnel the proceeds toward both immediate relief and the slow structural shift away from oil that Portugal, like the rest of Europe, has committed to make.