Oil companies in Portugal face a windfall levy on 2026 profits, measured against the last two years
Portugal's cabinet has approved a Temporary Solidarity Contribution on the oil sector. It hits only the share of profits above the 2024 and 2025 average, with revenue going to household support and energy efficiency.
With oil trading high since the spring, it was only a matter of time before somebody asked who pockets the difference. On Thursday the cabinet answered: it approved a bill creating a Temporary Solidarity Contribution on the Petroleum Sector, an exceptional levy on the windfall profits that crude extraction and refining companies book in 2026.
How is the oil windfall levy calculated?
It does not touch all profit, and that distinction is the whole point. It applies only to the slice of results that exceeds the average of the two previous years, 2024 and 2025. A company earning roughly what it earned before pays nothing extra. The ones who pay are the ones who earned far above their own recent normal, on the reading that the gap came not from brilliant management but from exceptional circumstances, chiefly the international rise in crude and fuel prices.
Where does the money go?
Two declared destinations. Part of it goes to supporting households and the sectors hit hardest by rising fuel costs, the classic logic of handing back downstream what you collect upstream. The rest funds investment in energy efficiency and in decarbonising the economy, on the argument that the surest way not to face this problem again is to depend less on the thing that causes it.
When does it take effect?
Not yet. What emerged from cabinet is a bill, which means parliament has the final word, and in a government without a majority that is no formality. The industry will be watching every stage of it, and the official detail is published in the cabinet communiqués.
The context explains the timing. Crude prices surged with the escalation in the Middle East and at one point jumped after Washington declared the ceasefire over, which meant fatter accounts for anyone refining and thinner ones for anyone filling a tank. Galp closed the first half with 812 million euros in profit, a number certain to be quoted by both sides of the debate now coming.
Image: Vitor Oliveira from Torres Vedras, PORTUGAL / Wikimedia Commons (CC BY-SA 2.0)
