Air Travel Taxes Update - Ireland

The taxation of air travel warrants consideration from an Irish perspective and Ireland is to constructively engage in EU discussions proposing an EU-harmonised approach to taxation and carbon pricing in the aviation sector, according to a recent Tax Strategy Group 'Climate Action and Tax' paper published by the Department of Finance Ireland.

The paper notes the increased level of interest in air travel taxes in recent times with a number of EU Member States having recently introduced or making plans to introduce such taxes. While these taxes are in general 'ticket taxes' aimed at reducing demand for air travel, there is growing sentiment in the EU that air travel is lightly taxed compared to other transport sectors, with particular focus on the EU exemption from excise duties for aviation fuels when used for the purposes of international commercial flight. In the context of concerns regarding climate change and the general principle of taxing those activities which generate significant amounts of greenhouse, there is EU-wide momentum to examine the taxation of air travel.

The Tax Strategy Group is not a decision making body and the papers it produces are intended to provide legislators with a list of options and issues to be considered during the course of the budgetary process. While air travel taxes do not appear to be on the agenda for Ireland's Budget 2020, this is an area to watch for future tax changes.


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