ExxonMobil, the US energy giant, is suing the EU in an attempt to make it withdraw its new windfall tax on oil companies.

A windfall tax is levied on businesses that benefit from something for which they were not responsible.

Energy companies are currently charging much higher prices for their oil and gas, thanks mainly to supply concerns caused by Russia’s invasion of Ukraine.

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Exxon accuses Brussels of surpassing its legal power, calling this tax break “counter-productive”.

In October, ExxonMobil announced a quarterly profit of nearly $20 billion (£17.3 billion).

Ursula von der Leyen, the European Commission’s chief executive, announced in September that major oil, gas, and coal companies would pay a “crisis contribution” on one‘s enhanced 2022 profits.

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A 33 percent tax on this year’s profits was announced, which were more than 20 percent higher than the average for the three previous years.

But Exxon argues that the levy discourages investments and undermines investor confidence, in a challenge filed at the EU’s Luxembourg-based General Court.

“Whether we invest here primarily depends on how attractive and globally competitive Europe will be,” Exxon spokesperson Casey Norton told the Reuters news agency.

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In an investor meeting earlier this month, ExxonMobil’s chief financial officer estimated that the EU tax would cost the group “over $2 billion”.

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

The EU is looking for alternative sources of energy so its less reliant on Russia, but that has left it scrambling for alternative, more expensive, sources.

EU ministers guesstimate that they can raise €140bn (£123bn) from the taxes on non-gas electricity producers and suppliers that are making higher profits than usual due to the current demand.

Source: BBC

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