Energy giant takes EU to court in furious backlash over 'counter-productive' tax
AUS energy giant is attempting to sue the EU in an effort to avoid a new windfall tax that is being slapped down on oil companies. ExxonMobil has lashed out at the bloc for introducing the "counter-productive" measure after it was ordered to pay a "crisis contribution" on its increased profits. Amid Europe's crippling energy crisis, major firms have seen their profits soar due to the surging increases in wholesale gas and electricity costs sparked largely by Russia's war in Ukraine and supply cuts to the continent.
European Commission President Ursula von der Leyen has called for firms raking in tonnes more cash for their oil and gas sales - even though they are not responsible for jumping prices - to be taxed on these extra profits. This measure can also be referred to as a windfall tax.
But Exxonmobil, which took home a staggering quarterly profit of almost $20 billion (£17.3 billion) in October, argues that a windfall tax would discourage investment. The major energy firm is not alone in its opposition to this measure, as other oil and gas giants have joined Exxonmobil in a furious backlash to the crackdown.
It comes after the bloc introduced a 33 percent tax on this year's profits. Profits were more than 20 percent higher than the average for the three previous years.
Exxonmobil spokesperson Casey Norton told Reuters: "Whether we invest here primarily depends on how attractive and globally competitive Europe will be."
The lawsuit - filed through subsidiaries in Germany and the Netherlands - claims the measure should not be allowed as it is a tax, a right reserved for national Governments only.
It also contests the use of the EU Treaty's Article 122, an emergency procedure that excludes the European Parliament, to slap down this kind of legislation.
Mr Norton told Politico in an email: "This litigation is driven by our concern about the unintended long-term effects of this policy on the competitiveness of European industry.
"This tax will undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products."
But European Commission spokesperson Arianna Podestà has argued that the EU is well within its right to enact such a measure.
She wrote that "the Commission maintains that the measures in question are fully compliant with EU law", adding that the measure is intended to "ensure the whole energy sector pays its fair share in these difficult times for many to address the extraordinary energy crisis resulting from the weaponisation of the energy supply by Russia".
It comes after billpayers across Europe have seen their bills rise astronomically while energy firms take home billions in extra profits.
Mr Norton said: "We recognize that the energy crisis in Europe is weighing heavily on families and businesses, and we've been working to increase energy supplies to Europe. Our challenge is targeted only at the counter-productive windfall profits tax, and not any other elements of the package to reduce energy prices."
It comes as the EU scrambles to wean itself off Russian fossil fuels to deprive the Kremlin of a huge source of revenue amid the war in Ukraine.
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