President Nawrocki signs windfall tax law — Notes from Poland

Polish President Karol Nawrocki has signed into law a one-off windfall tax on fuel companies, which he had previously blocked. Following this, the Polish government announced a reduction in the VAT rate on fuel from 23% to 8% and a cut in excise duty. The measures will remain in force until 31 December, reports Notes from Poland.

Windfall tax

The new levy will amount to 60% of windfall profits from the sale of liquid fuels. They will be defined as the amount exceeding the level that a company could have earned at the average fuel sales margin in 2025, increased by 20%.

The tax is expected to bring around 4 billion zlotys, or €914 million, to the budget. Poland’s Ministry of Finance explained the introduction of the levy by exceptional economic and geopolitical conditions that provided the fuel sector with higher financial results due to a supply shock, rather than through improved operational efficiency.

The tax was intended to compensate for part of the approximately 4.7 billion zlotys that the government spent to curb prices for consumers. Previously, the government reduced VAT and excise duty and also set a maximum daily fuel price. These mechanisms were in force from March to June.

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Lower fuel prices

In July, Nawrocki refused to sign the law and referred it to the Constitutional Tribunal for review. The president cited serious constitutional doubts, in particular because the tax was applied retroactively to revenue received since the beginning of March.

In September, the parliamentary majority adopted the bill again. While signing it, the president also asked the Constitutional Tribunal to assess the constitutionality of the document. Nawrocki said that he expects the government to urgently restore measures to reduce prices at filling stations and fuel costs for farmers.

Finance Minister Andrzej Domański forecast that, after support is restored, prices could fall by around 1.2–1.3 zlotys per litre. According to the ePetrol service, the average price of diesel in Poland at that time was around 9.14 zlotys per litre, while PB95 petrol cost 8.19 zlotys. Energy Minister Miłosz Motyka also announced plans to restore maximum daily fuel prices.