Michael Collins (Cork South West, Independent)
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58. To ask the Minister for Communications, Climate Action and Environment if he will outline the evaluation process leading to the decision on the solidarity fund announced by the Government regarding the implementation of Council Regulation No. 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (details supplied); if he will specifically set out all of the data related to the determination of the solidarity contribution rate of this regulation; and if he will make a statement on the matter. [63196/22]

Michael Collins (Cork South West, Independent)
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59. To ask the Minister for Communications, Climate Action and Environment if he will set out the solidarity tax contribution rates set by all other member states within the European Union to date on the implementation of Council Regulation No. 2022/1854 of 6 October 2022 to address high energy prices (details supplied); if losses are deductible against those rates; and if he will make a statement on the matter. [63197/22]

Eamon Ryan (Dublin Bay South, Green Party)
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I propose to take Questions Nos. 58 and 59 together.

Council Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices came into force in October 2022. This Regulation seeks to address windfall gains in the energy sector through measures, including a temporary solidarity contribution based on increases in taxable profits in the fossil fuel production and refining sectors.

The Council Regulation sets out the temporary solidarity contribution which shall apply on taxable profits which are more than 20% above the average for a baseline period from 2018 to 2021. The rate at which the temporary solidarity contribution is to be applied is a matter for each Member State but must be at least 33%.

On 22 November 2022, the Government decided that the temporary solidarity contribution on taxable profits which are more than 20% above the baseline period from 2018 to 2021 will be subject to a rate of 75%, losses from previous years will not be taken into account in the calculation of the taxable profits and the temporary solidarity contribution will apply to 2022 and 2023.

A key factor in considering the appropriate rate was the effective rate that would apply. Only taxable profits which are more than 20% above the baseline will be subject to the temporary solidarity contribution. This will lead to an effective rate of 0% for increases in taxable profits up to 20%, an effective rate of 50% for increases in taxable profits of 60% and an effective rate of 60% where taxable profits have doubled. This means that it is only where taxable profits have increased by more than 60% that the State would collect more of the increase than the companies would retain.

The rate of 75% is considered appropriate as it ensures that where significant windfall gains are made (e.g a doubling of profits) then over half of the gain would be collected by the State with lower proportions collected where the windfall gain has not been as significant.

As the process of implementing the Council Regulation is still underway, a comprehensive list of the decisions made by each Member State, including the rate to be applied, is not available at this time.

Legislation will be required to implement this Council Regulation and my Department is continuing to work with other Departments and stakeholders in developing this legislation.