Irish air travel tax: Commission welcomes overhaul of discriminatory charges; closes infringement case

Brussels, 16 June2011 – The European Commission has 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 EU law by charging passengers on flights to other Member States more than passengers on domestic flights. As Ireland now levies the same charge regardless of destination, the Commission has decided to close its infringement procedure.

The EU rules

EU law¹ 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. This important principle underpins the internal market in aviation which has been such a success, delivering major benefits for Europeans and European business since 1997.

The discriminatory tax

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 €10 on air passengers whose destination was greater than 300km from Dublin Airport. Shorter flights were taxed at just €2 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 infringement procedure

In March 2010 the Commission sent Ireland a letter of formal notice in which it set out its concerns with respect to the air travel tax. In December 2010 the Irish authorities informed the Commission of their intention to modify the tax so that effective March 2011 it is levied at a single rate of €3 per passenger, regardless of the destination of the flight. The necessary legislation in order to achieve this was adopted in the Finance Act 2011 (Act No. 6 of 2011) on 6/02/11.

The Commission considers that the tax now complies with EU law. It has therefore decided to close the case.

For more information on EU infringement procedures, see MEMO/11/408.

Source – European Commission.