EU Court Says Irish Air Tax Was Illegal Aid

December 21, 2016

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The European Court of Justice has ruled that Aer Lingus and Ryanair gained a financial advantage from a reduced rate of air travel tax and must repay the difference.

Ireland’s air travel tax was EUR€2 for destinations less than 300 km (190 miles), and EUR€10 for longer flights. The European Commission in 2012 found that the lower rate for short-haul flights constituted state aid.

The Commission ordered recovery of the aid, which amounted to the €8 per passenger difference between the rates.

Aer Lingus and Ryanair brought actions against the EC over the recovery of the aid. The court partially annulled the decision on the ground that the Commission had failed to show that the aid was €8 in all cases.

The Commission then lodged an appeal before the Court of Justice against the judgment.

The ECJ found that the airlines derived a competitive advantage from the lower rate and required Ireland to recover €8 per passenger for each of the flights concerned.

Ireland now levies a flat rate for all flights.