The limits of the “solidarity levy” on extra profits

ExxonMobil has decided to appeal before the General Court of the European Union against the tax extra profits of hydrocarbon companies adopted by member states to deal with the energy price crisis. According to the oil giant, the Council – the institution in which the governments of the twenty-seven are represented – did not have the legal authority to impose a new tax using the emergency powers provided by the treaty. The Commission has chosen article 122 as the legal basis, which provides for the possibility of adopting, “in a spirit of solidarity between member states, measures appropriate to the economic situation, if serious difficulties arise in the supply of certain products, in particular in the energy sector”. But the tax sector is regulated by another article of the treaty, 113, which requires unanimous decisions after consulting the European Parliament. The tax provides for a levy of at least 33 percent on profits made in 2022-23, which are higher than the 20 percent average for 2018-21.