The American oil group ExxonMobil is trying to prevent a tax increase through the European court. This year, the European Union introduced an extra tax for companies that make extremely high profits due to the energy crisis. The European Commission wants to use the proceeds to alleviate the social consequences of high energy prices. The money will also be used to make energy production more sustainable. The extra tax on the energy companies should yield about 25 billion euros.
ExxonMobil disputes that the European Union has the legal right to introduce a new tax. According to the American company, that right would only lie with the EU member states.
Exxon filed the lawsuit Wednesday at the European Court of Justice in Luxembourg. The American group starts the business through its subsidiaries in the Netherlands and Germany.
In the third quarter alone, Exxon posted a profit of 19.7 billion euros
According to Exxon, the extra tax will cause energy companies to invest less in Europe, so that imports will be larger than necessary in the coming years. A spokesman for the company, who on Thursday by the Financial Times (FT) was quoted as saying that Exxon has invested $3 billion in its European refining facilities over the past decade, which would have made Europe less dependent on Russia.
Large share to shareholders
High oil and gas prices, mainly due to the Russian invasion of Ukraine, have led to mega profits in the energy sector. In the third quarter, ExxonMobil posted a net profit of 19.7 billion dollars (18.5 billion euros). For the period from January to September, the profit meter this year is currently at $ 43 billion. Concerns such as BP and Chevron also achieved record results. Shell posted a profit of USD 30 billion in the first nine months. A substantial part of the profits goes to shareholders. This is done by paying out more dividends or by buying back own shares.
The high energy profits have led to plans in several countries to increase taxes on these companies. For example, the United Kingdom was one of the first to introduce a so-called windfall tax. In response, various energy companies said that they would be critically reviewing future investments in that country from now on. In response to the EU plan, the ExxonMobil spokesman countered FT questions ‘about multi-billion euro investments’. “Or we [in de EU] investment depends mainly on how attractive and competitive Europe is from a global perspective.”
From January, Brussels wants to impose a levy of 33 percent on excess profits. This concerns results that are at least 20 percent higher than the profits achieved on average between 2018 and 2021.
The Commission did not want to respond substantively to the upcoming lawsuit on Thursday. She stated that she was “informed” of Exxon’s action. “It is now up to the Court of Justice to judge this case.”
This summer, President Biden lashed out at ExxonMobil as oil prices rose
Exxon’s mega profits attracted attention in America earlier this year. This summer, President Biden lashed out at the company as oil prices rose. “Exxon deserves more than God,” said Biden, who asked the group to invest more and pay its taxes. “Why don’t they drill for oil? Because they earn more by not producing more oil.”
ExxonMobil defended itself by claiming that in five years the company invested twice as much as it made profits. “For the longer term, the government can stimulate investment by pursuing clear and consistent policies.”