The Italian government is making a new attempt for its special tax on the "excess profits" of the energy companies.

In the future, 50 percent of these excess profits are to be skimmed off.

The Treasury defines them as profits in the energy business that are at least 10 percent above the average level for the years 2018 to 2021.

The government of Prime Minister Giorgia Meloni expects revenues of around 2.5 billion euros this year.

Christian Schubert

Economic correspondent for Italy and Greece.

  • Follow I follow

The case of Italy shows the difficulties faced by a government in clearly defining a profit tax and thus correctly skimming off the assumed excess profits.

Other countries are also struggling with this.

With expected earnings of around 2.5 billion euros, Meloni's plans are less ambitious than those of her predecessor Mario Draghi.

He had hoped for annual income of 10 billion euros, which never came about.

A wave of lawsuits by companies began against a tax whose legal basis was generally considered poorly made.

The old tax was primarily based on the added value measured in terms of value added tax, i.e. the difference between the purchase price and the selling price.

Increases in sales due to other factors such as increases in energy prices were therefore also subject to tax.

Unlike the Draghi concept

The tax rate under Draghi was first 10 percent, then 25 percent.

The tax revenue from the old tax is expected to be at most 5 billion euros this year.

A number of companies felt that the profit calculation was unfair and hoped that the tax, like a similar levy tax called the Robin Hood tax in the past, would be declared unconstitutional.

At that time, the taxes paid had not been refunded;

therefore, many companies waited to pay the excess profit tax.

The new system is now set to make a clearer focus on the corporate tax called Ires, according to the new draft of the latest budget bill that the government is putting to Parliament for debate today.

There is a cap on the tax liability, which is 25 percent of a company's net assets at the end of 2021.

A few days ago, the government reported that the new profit skimming tax should be 35 percent, now it is increasing to 50 percent in order to increase state revenues.

Around 7,000 companies in the energy sector are said to be subject to tax.

The tax has to be paid in the middle of the year, which shows how badly debt-ridden Italy needs the income.