The European Union’s emergency response to the energy crisis came under renewed legal scrutiny on Tuesday as the Court of Justice of the European Union heard cases challenging the temporary solidarity contribution imposed on energy companies after Russia’s full-scale invasion of Ukraine.
The hearing before the Court’s Grand Chamber concerns three linked cases: Varo Energy Belgium and Others, Vermilion Energy Ireland, and Acea Produzione and Others. According to the Court of Justice, the proceedings concern the validity and interpretation of the EU measure, as well as the compatibility of national implementing legislation in Belgium, Ireland and Italy.
At issue is Council Regulation 2022/1854, adopted in October 2022 as part of the EU’s emergency intervention to address high energy prices. The measure included a revenue cap for certain electricity producers and a temporary solidarity contribution on surplus profits made by companies active in the fossil fuel sector.
The levy was introduced at a time of acute pressure on European households, businesses and governments. Energy prices had risen sharply following Russia’s invasion of Ukraine, the disruption of gas supplies, and wider instability in global energy markets. Brussels argued that companies benefiting from exceptional profits should contribute to measures aimed at reducing the burden on consumers and supporting affected sectors.
The legal dispute now before the Court is not simply a disagreement over the size of a tax bill. It raises wider questions about how far the EU may go when using emergency powers during a crisis, how such measures are implemented by member states, and whether extraordinary fiscal interventions can withstand scrutiny once the immediate emergency has passed.
The regulation was adopted under Article 122 of the Treaty on the Functioning of the European Union, a legal basis that allows the Council to act in situations of serious difficulty, particularly in the supply of certain products, including energy. That route allowed the EU to move quickly. It also avoided the normal unanimity requirement that applies to many tax measures.
This point is central to the legal controversy. Several challenges argue, in substance, that the solidarity contribution had the character of a tax measure and that its adoption under emergency economic powers raises questions of competence, legal basis and institutional procedure.
The cases also concern the way national governments implemented the EU rules. The Court’s hearing notice states that energy companies in Belgium, Ireland and Italy are challenging the national measures implementing the regulation, while the Irish companies are also contesting the validity of the regulation itself.
Italy’s case illustrates the practical importance of the dispute. The Italian Constitutional Court referred questions to Luxembourg after companies challenged the national solidarity contribution imposed under Italy’s 2023 budget law. The Italian scheme applied not only to upstream operators involved in extraction and refining, but also to downstream operators including distributors, resellers and importers.
The Italian court’s summary states that the measure generated approximately €3.8 billion, compared with an estimated €1.8 billion that would have been collected under the standard EU solidarity contribution. The dispute therefore concerns both the legal scope of the EU regulation and the extent to which national governments could design broader or more intensive equivalent measures.
Germany has also seen litigation over the issue. In a separate case, the German Federal Fiscal Court found serious doubts about the legitimacy of the German energy crisis contribution and referred to pending proceedings before the EU courts. The dispute includes questions over Article 122, equality and non-discrimination, retroactive effect, and the consequences for national legislation if the EU regulation is found to breach higher-ranking law, according to legal analysis.
For the Commission and national governments, the political argument behind the levy was straightforward: exceptional profits during an exceptional crisis justified an exceptional contribution. A Commission stocktaking report described the measure as part of the EU’s response to surplus profits in the fossil fuel sector and the need to address high energy prices.
For companies, however, the cases test whether the EU’s emergency response respected the limits of EU law. The outcome could influence not only past tax assessments, but also how Brussels and member states design future crisis measures in energy, defence, industrial policy or other areas where speed is presented as a reason for exceptional intervention.
The Court is not expected to resolve the matter immediately. After the hearing, an Advocate General’s opinion may follow before the judges issue their ruling. Until then, the cases leave unresolved a central question from Europe’s energy crisis: whether temporary solidarity in a moment of emergency can be translated into binding fiscal obligations without exceeding the EU’s legal powers.
