Fresh off posting the highest quarterly profit in its history, the U.S.-based fossil fuel giant ExxonMobil sued the European Union on Wednesday in an attempt to stop the bloc from imposing its recently approved windfall tax targeting major oil and gas companies.
The Financial Times, which first reported the new lawsuit, noted that the challenge takes aim at the European Council’s “legal authority to impose the new tax—a power historically reserved for sovereign countries—and its use of emergency powers to secure member states’ approval for the measure.”
“The new tax is due to take effect from December 31 and will apply a levy of at least 33% on any taxable profits in 2022-23 that are 20% or more above average profits between 2018 and 2021,” the newspaper explained.
In a statement, Exxon spokesperson Casey Norton insisted the company recognizes that sky-high energy costs are “weighing heavily on families and businesses” but claimed the tax would “undermine investor confidence, discourage investment, and increase reliance on imported energy.”
Reuters reported Wednesday that Exxon’s chief financial officer has estimated the E.U.’s windfall tax could cost the corporation around $2 billion through the end of next year—a fraction of the company’s 2022 profits.
Approved in late September amid a mounting cost-of-living crisis across Europe, the windfall tax was presented as an effort to generate additional revenue to “provide financial support to households and companies” struggling with high energy costs. Oil and gas companies like Exxon have been accused of exploiting global energy market chaos spurred by Russia’s war on Ukraine to hike prices and pad their bottom lines.
In late October, Exxon announced it brought in $19.7 billion in profits from July to September, its largest-ever quarterly haul. The company also announced it would raise its dividend and expand its share buyback program, rewarding wealthy investors as consumers continue to face elevated prices at the pump.
According to a recent filing, Exxon has also been rewarding its top executives, boosting the annual salary of CEO Darren Woods from $1.70 million to $1.88 million for the coming year.