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Irish Airlines Face Back Tax Bills

By Ulrika Lomas, Tax-News.com, Brussels

07 August 2012


The European Commission has ordered Ireland to claw back taxes from the airlines that it says benefited from Ireland's two-tier air travel tax, which was modified last year.

In 2009, Ireland has introduced the ATT, levied on each flight departing from Ireland. The applicable rate was EUR2 for each flight whose destination was within 300km from Dublin, and EUR10 for all other flights. The ATT was amended however after the EC adjudged that it created unjustified distortions in the single market.

The European Commission has found that the two-tier system favoured all Irish domestic flights and those to UK destinations, thereby giving a competitive edge to a few airlines operating those routes.

An estimated EUR20m is to be paid back to the Irish government, including around EUR10m by Ryanair alone.

Ireland has already repealed the ATT's two-tier structure, with effect from April 2011, replacing it with a flat EUR3 rate for all flights. As a result, the European Commission's order covers a two-year period only.

"Our ultimate aim is to establish a level playing field for all airlines and airports regardless of their business model, from flag carriers to low-cost airlines,” European Commissioner in charge of competition regulation Joaquín Almunia said.

The European Commission is currently reviewing 60 cases concerning the aviation sector.

“We will look at other cases of state aid to airports and airlines in the coming months, applying a consistent approach,” Almunia said.

TAGS: tax | European Commission | air passenger duty (APD) | Ireland | aviation | European Union (EU) | Europe

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