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Irish Flight Tax Cut Ends Infringement Procedure

by Jason Gorringe, Tax-News.com, London

17 June 2011


The European Commission has officially welcomed Ireland's decision to remove the discriminatory aspects of its air travel tax, levied on air passenger travel.

The Commission had expressed its concerns that the tax breached European Union (EU) law by charging passengers on flights to other member states more than passengers on domestic flights. As Ireland now levies the same charge (of EUR3 per passenger) regardless of the flight's destination, as amended by the 2011 Finance Act, the Commission has decided to close its infringement procedure.

EU law forbids member states from imposing higher charges or stricter administrative requirements on air services which cross borders within Europe than on domestic services operated within a single member state.

The air travel tax was put in place by the Irish authorities in March 2009. As originally structured, the tax was levied at a rate of EUR10 on air passengers whose destination was greater than 300km from Dublin Airport. Shorter flights were taxed at just EUR2 per passenger. Such a distinction had the effect of imposing a higher tax on cross-border flights (almost all cross-border flights were charged at the higher rate whereas all domestic flights were covered by the lower rate). As such the Commission expressed its concerns that the tax constituted a barrier to the freedom to provide services across borders.

The government is planning to abolish the tax altogether if it can reach agreement with the airlines on traffic-enhancing measures.

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

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