Exxon is suing the European Union in a move to block a new dividend tax on oil companies

Dec. 29 (Reuters) – US oil giant Exxon Mobil (XOM.N) It is suing the European Union in a bid to force it to rescind a sudden new bloc tax on oil groups, arguing that Brussels overstepped its legal authority by imposing the tax.

Record profits for oil companies this year benefiting from higher energy prices have boosted inflation around the world and led to fresh calls for more taxes on the sector.

Exxon spokesman Casey Norton said Wednesday that the windfall dividend tax is “counterproductive,” discouraging investments and undermining investor confidence. He said Exxon would take into account the tax as it considered future investments worth billions of euros in Europe’s energy supply and transformation.

“Whether we invest here depends primarily on how attractive and globally competitive Europe is,” Norton said.

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The European Commission said it had taken note of the lawsuit.

“It is now up to the General Court to decide this case,” Commission spokeswoman Ariana Podesta said in a statement on Thursday. “The Commission confirms that the procedures involved are fully in accordance with EU law.”

Windfall profits taxes imposed by Europe could cost at least $2 billion through the end of 2023, chief financial officer Kathryn Michaels said on a call with analysts Dec. 8.

Exxon said it invested $3 billion in the past decade in refining projects in Europe. The company said the projects help it deliver more energy products at a time when Europe is struggling to reduce its imports from Russia.

“We will continue to work with EU leaders to address these issues. Thoughtful policy is critical,” the company said.

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Chevron Corporation (CVX.N) He also warned that taxing oil production would only reduce energy supplies by discouraging company investment.

“This runs counter to the intention to increase suppliers and make energy affordable,” Pierre Breber, Chevron’s chief financial officer, told Reuters in October.

In September, EU countries agreed emergency windfall profits taxes for energy companies that include a tax on excess fossil fuel companies’ profits made in 2022 or 2023 and another on excess revenue low-cost energy producers earn from rising electricity costs.

The EU expects that the “temporary solidarity contribution” could generate around €25 billion in public revenue that would be redistributed by EU governments.

“It will ensure that the entire energy sector pays its fair share in these difficult times for many to address the extraordinary energy crisis resulting from Russia’s weaponization of energy supplies,” said Podesta of the Commission.

Additional reporting by Sabrina Valli in Houston Additional reporting by Arunima Kumar in Bengaluru and Jan Strupchowski in Brussels Editing by Chizu Nomiyama, Matthew Lewis, Eileen Hardcastle

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