The American oil firm ExxonMobil has lodged an appeal with the Court of the European Union in response to the tax that Brussels has imposed on the “surplus profits” of energy companies. As per France Press, the energy company believes that this may “discourage investment.”
The producers and distributors of oil, gas, and coal, who have collected tremendous profits as a result of the price spike caused by the conflict in Ukraine, are required to pay this fee, which was adopted at the end of September and is formally known as the “temporary solidarity levy.”
The legislation allows member states of the EU to deduct 33 percent of taxable profits for the year 2022 if those profits exceed by more than 20 per cent the average receipts for the years 2019 to 2021. The money that is collected can then be distributed to households and businesses that have high monthly power costs.
When proposing this levy, the EC was very cautious not to use the word “tax,” as any new tax provision at the European level would require the consent of all 27 member states. According to AFP, this strategy is more difficult and fraught with risk than adopting policies through a qualified majority vote.
The German and Dutch subsidiaries of ExxonMobil intended to steer clear of any potential legal battles that could be analogous to the one that was brought before the Court of the European Union in Luxembourg by German and Dutch subsidiaries. If a company believes that one of the EU institutions has violated its rights, it has the ability to file an appeal with the Court of Justice of the European Union.
“We realize that the energy crisis in Europe is taking a toll on families and companies, and we are working hard to increase Europe’s energy supply,” Casey Norton, a spokesman for the company, said in a statement to AFP.
Taxing “surplus profits” is “counterproductive,” he said. In his words, such a tax “will undermine investor confidence, discourage investment and increase dependence on energy and petroleum product imports.”
EC acknowledges
The Commission “took note” of ExxonMobil’s protest but believed that the contested policy was fully compliant with EU legislation. A spokesperson for the European executive responded. According to her, the Twenty-Seven had the right to resort to an emergency text, i.e. one adopted directly by the states without consulting the European Parliament, for the sake of “solidarity” in response to the energy crisis.
The system “targets excessive profits in oil, gas, and coal” and so intends to retain incentives to invest in the transition to green energy, while the monies raised will be returned exclusively to vulnerable consumers, enterprises and entrepreneurs, argued the representative. Brussels thinks that the device might generate approximately 25 billion euros for the European Union.
