Hungarian oil giant MOL to sue Slovak government for windfall tax

Euractiv | 16 January 2023

Hungarian oil giant MOL to sue Slovak government for windfall tax

By Michal Hudec

MOL and its Slovak subsidiary Slovnaft are working on a lawsuit against the government for the new windfall tax, which was approved by the National Council in December which aims to raise funds to help with expensive energy for more affected industries and households.

The case may be partly based on the nationalistic statements against Slovnaft’s Hungarian owner made by former Finance Minister Igor Matovič in the National Council.

“Our lawyers are analysing the whole process of the adoption of the norm, especially in the context of the debate in the Parliament, where the former Minister of Finance presented the measure as a regulation against Hungarian owners. It is precisely from this aspect that we think we will be successful in a possible lawsuit,” Slovnaft’s spokesman Anton Molnár explained.

During the discussion preceding the approval of the tax, Matovič argued that with the tax, Slovakia can get more money from Hungarian owners.

MOL and Slovnaft want to progress with the case despite the government making several concessions from their first proposal after Slovnaft’s pressure. The tax rate has been lowered from 70% to 55% and the collection period has been limited to only one year after. This means that Slovnaft will pay the extra tax only for 2022. Originally, the tax was supposed to last until 2025.

MOL wants to take the case to the arbitration court in Washington and thus follow the example of Exxon Mobil. The American giant filed a suit against the EU at the end of December in order to block its temporary tax on oil firms’ windfall profits.

“We are closely following media reports concerning ExxonMobil, which has challenged the EU regulation in the courts on the grounds that the EU authorities have exceeded their powers and that these solutions to the energy crisis will in fact be counterproductive,” Molnár said.

Slovnaft says that although tax has been lowered, it is still very high. European Commission recommended member states the minimum rate of 33%. Germany, for example, opted for a minimal rate, while Austria set the tax to 40%. Slovnaft exports its product to both of these markets and the high Slovak tax rate will put them at a disadvantage.

source: Euractiv