VAT News

Calls to End Aviation's Tax Break In The EU

The Netherlands and France have joined forces in attempts to convince other European countries to end the current tax exemptions on jet fuel and plane tickets, as part of an ongoing drive to make the EU carbon neutral by 2050.

At a European conference at the Hague on Thursday 27th & Friday 28th, which is attended by all 28 member states, they will start a discussion to increase ticket taxes, reducing kerosene levies and increase VAT on air travel.

Currently there is a near complete lack of taxation on air travel within Europe, something The Netherlands want to change, and France have joined the efforts to end tax breaks on jet fuel as part of the wider initiative for the European Union to be carbon neutral.

It seems as if The Netherlands will be implementing their own 'ticket tax' regardless of whether fellow member states follow suit with plans to introduce a €7.50 ticket tax for departing passengers from 2021 onwards. They have attributed a combination of low aviation taxes, an increasing amount of budget airlines offering cheaper and cheaper flights, and the rise of Airbnb have led to an unprecedented boom in intra-European city-trips.

IMF Tax Policy Head, Ruud De Mooij, states "Airline travel is nearly entirely exempt from all tax, despite having many externalities of its own. Ending its under taxation would level the playing field versus other modes of transport."

"It's really strange: emissions at high altitude are more dangerous than emissions on the ground, and yet we tax them on the ground but not in the sky," Swedish Finance Minister Magdalena Andersson told a Reuters reporter.

A EU report shows that just six out of 28 EU member states levy ticket taxes on international flights, with the UK's rates by far the highest. French ticket taxes are as low as €1 for short-haul economy flights, while EU-wide the average tax per passenger is around €11 (this compares with an average €15 euros in the US, and as much as €40 euros in Australia, Mexico and Brazil).

Tickets for flights between EU cities are currently exempt from VAT in all EU countries, but 23 EU member states charge VAT on domestic flights. Introducing VAT on intra-EU flights would require agreement from the 28 EU member states, and is something The Netherlands & France are hoping to achieve.

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