Vermilion Energy Ireland Ltd, Vermilion Exploration and Production Ireland Ltd, and Vermilion Energy Corrib Ireland Ltd, have brought proceedings against the Minister for the Environment, Climate and Communications, Ireland and the attorney general.
The case came before the High Court earlier this year and yesterday Justice Michael Quinn agreed to a request from the parties to have the matter referred to the CJEU.
Michael Cush SC, for Vermilion, said the court’s guidance will be sought on the interpretation of EU law in relation to legislation introduced here giving effect to an EU regulation on emergency intervention to address high energy prices. This was introduced after the Russian invasion of Ukraine in February 2022.
Following engagement between the sides, the questions to be sent to the CJEU have been virtually agreed, as has a statement of fact, he said. It was hoped the Irish reference could be dealt with along with a similar reference from Belgium.
In outlining the background to the case, Mr Cush said there were serious upfront costs of some €3.65bn in opening the Corrib field, the only natural gas field in the State. Corrib came on stream in December 2015 and in 2021, the year before the adoption of EU regulation, Vermilion had losses of €1.6bn, he said. Under Irish tax law, energy companies can carry forward losses against future trading profits indefinitely.
Given the life span of Corrib, it is possible the operators would never have been liable to pay corporation tax although this is to be viewed with caution, counsel said.
Catherine Donnelly SC, for the defendants, said while her side was not objecting to the referral to the CJEU, it was satisfied about the validity of the legislation.
Counsel also said while there was an agreed statement of facts for the purpose of a referral, there are many disputed facts between the parties. These include that there is no proof that Vermilion has not earned a profit.
Mr Justice Quinn said he was satisfied the referral should be made and this could be formally done today.
Under the windfall gains tax, energy companies had to pay a “solidarity contribution” at a minimum rate of 33pc, calculated by reference to taxable profits in the fiscal years 2022 and/or 2023.
It applied to profits which are above a 20pc increase in the average of taxable profits and member states could decide whether or not to include 2022.