ExxonMobil Sues EU In A Move To Block Energy Windfall Tax

(RTTNews) - Energy giant ExxonMobil is suing the European Union to block new energy windfall tax on oil firms, reports said.

The lawsuit was filed on Wednesday by its German and Dutch units at the European General Court in Luxembourg City, challenging the EU's legal authority to impose the new tax.

The company argued that the European Commission, the EU's executive, exceeded its legal authority by imposing the tax to raise funds to offset soaring energy prices.

Amid a surge in energy prices triggered by Russia's war in Ukraine, European Commission Chief Ursula von der Leyen in September had announced the plan for major energy companies to pay a crisis contribution on their increased 2022 profits to help bring down energy bills and ease the burden on energy consumers.

Oil and gas companies are making hefty profit partly due to the supply concerns as a result of Russia's invasion of Ukraine.

The proposed windfall tax, which is expected to take effect from December 31, means a tax of at least 33 percent on any taxable profits in 2022-23 that are 20 percent or more above average profits between 2018 and 2021.

With the solidarity contribution from major energy companies, the Commission expects to raise 25 billion euros.

The Commission's move was in response to EU's efforts to wean itself off Russian energy amid the ongoing invasion, but it requires to find alternative sources.

ExxonMobil reported a third-quarter profit of around $20 billion, nearly triple the previous year. According to the company's chief financial officer, the EU tax is estimated to cost the firm over $2 billion through to the end of 2023.

Exxon, in its filing, calls the measures misleading and counter-productive, and argues that the levy would undermine investor confidence, discourage investment, and increase reliance on imported energy.

ExxonMobil reportedly said, "Our challenge is targeted only at the counter-productive windfall profits tax, and not any other elements of the package to reduce energy prices."

The several measures agreed to by the council also included a cap on revenue from low-cost power generation, which Exxon reportedly was not opposing.

Meanwhile, the Financial Times reported that the European Commission said it takes note of Exxon's legal application, and that it will be now up to the General Court to rule on this case.