HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 119/30
EN
Official Journal of the European Union
30.4.2013
COMMISSION DECISION
of 25 July 2012
on State aid case SA.29064 (11/C, ex 11/NN) — Differentiated air travel tax rates implemented by
Ireland
(notified under document C(2012) 5037)
(Only the English text is authentic)
(Text with EEA relevance)
(2013/199/EU)
THE EUROPEAN COMMISSION,
(4)
Following an extension of the deadline to reply, the Irish
authorities submitted their observations on the Commis
sion's decision on 15 September 2011.
Having regard to the Treaty on the Functioning of the European
Union, and in particular the first subparagraph of Article 108(2)
(5) On
18
October
2011,
the
Commission
decision
to
thereof,
initiate the procedure was published in the Official
Journal of the European Union ( 2 ). The Commission
invited interested parties to submit their observations
on the measure.
Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,
(6) On
17
November
2011,
Ryanair
submitted
its
response
to that invitation. By letter of 28 November 2011, the
Having called on interested parties to submit their comments
Commission asked Ryanair whether any information in
pursuant to those provisions (
Ryanair's submission was confidential and could not be

1 ) and having regard to their
comments,
disclosed to the Irish authorities. By letter of
30 November 2011, Ryanair confirmed that the
submission of 17 November 2011 could be forwarded
to the Irish authorities.
Whereas:
(7) By
letter
of
12
December
2011,
the
Commission
forwarded Ryanair's comments to the Irish authorities,
1. PROCEDURE
which provided their comments thereon on 13 January
2012.
(1) In
2009,
the
Commission
received
a
State
aid
complaint
from an airline operator (hereafter "complainant")
regarding several aspects of the air travel tax imple
2. DESCRIPTION OF THE MEASURE
mented by Ireland including the differentiated tax rates
applicable to flights with destinations located no more
(8) As
of
30
March
2009,
the
Irish
authorities
introduced
an
than 300 km from Dublin airport, which allegedly
excise duty on air passenger transport. The national legal
favoured Aer Arann.
basis for the tax is section 55 of the Finance (No. 2) Act
2008, which introduces an excise duty referred to as the
"air travel tax" which the airline operators are liable to
pay in respect of "every departure of a passenger on an
(2) By
letter
dated
13
July
2011,
the
Commission
informed
aircraft from an airport" located in Ireland ( 3 ). The tax
Ireland that it had decided to initiate the procedure laid
becomes due at the time a passenger departs from an
down in Article 108(2) of the Treaty in respect of the
airport on an aircraft capable of carrying more than 20
differentiated tax rates applied under the Irish air travel
passengers and not used for State or military purposes.
tax. The Commission asked the Irish authorities to
While the tax in fine is intended to be passed on to the
forward a copy of the decision to the beneficiaries.
passengers via the ticket price, it is the airline operators
that are accountable for it and liable to pay it ( 4 ).
(3)
On 9 August 2011 and 5 September 2011, the airline
( 2 ) See footnote 1.
(
operator Ryanair Ltd. (hereafter "Ryanair") submitted

3 ) Aircraft that are capable of carrying less than 20 passengers and
aircraft used for State or military purposes are excluded from the
letters regarding the Commission's decision to initiate
scope of the tax. The same applies to departures from airports with
the proceedings. The Commission responded to those
less than 10 000 passengers per year.
letters on 5 October 2011. On 17 October 2011,
( 4 ) Every airline operator liable to pay the tax must register with the
Ryanair submitted another letter.
Revenue service and must, within 20 days or such other period that
the Revenue service may determine, furnish the Revenue service with
a return showing the number of departures by passengers during the
( 1 ) OJ C 306, 18.10.2011, p. 10.
previous month.

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30.4.2013 Official
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(9)
At the time of its introduction, the tax was levied on the
reference system, while the reduced rate, that was
basis of the distance between the airport where the flight
applicable to a well delimited category of flights,
began and the airport where the flight ended, at the rate
appeared to be an exception from the reference system.
of (i) EUR 2 in the case of a flight from an airport to a
destination located no more than 300 km from Dublin
airport and (ii) EUR 10 in any other case.
(15) The
Commission
had
doubts
whether
the
reduced
rate
was justified on the basis of the distance between the
starting point and the final destination of the journey.
(10) Following an investigation by the Commission
regarding a possible infringement of Regulation (EC)
No 1008/2008 of the European Parliament and of the
(16) First, it was not applicable on the basis of the actual
Council of 24 September 2008 on common rules for the
length of the journey, but on the basis of the distance
operation of air services in the Community ( 5 ) and
between Dublin airport and the destination.
Article 56 of the Treaty on the freedom to provide
services, the rates were changed as of 1 March 2011
so that a single tax rate of EUR 3 is applicable to all
departures, regardless of the distance travelled ( 6 ).
(17) Second, the structure and objective nature of the tax did
not seem to relate to the distance of the flight, but to the
fact of departing from an Irish airport. The connection
with the fiscal authority, the taxable event (the departure
3. GROUNDS FOR INITIATING THE FORMAL
from an Irish airport) and the negative externalities for
INVESTIGATION PROCEDURE
the Irish society (noise and air pollution) were precisely
the same for all passengers departing from an Irish
(11) The
Commission
initiated
the
formal
procedure
regarding
airport regardless of the destination of the flight and
the lower tax rate, which was applicable for certain
the distance travelled. The concerned airline operators
routes during the period 30 March 2009 until 1 March
were in the same as each other legal and factual
2011, because it considered that it appeared to constitute
situation with regard to that objective.
State aid and had doubts regarding its compatibility with
the internal market.
(18) Third,
the tax system was not characterised by an
articulated differentiation in the tax level in relation to
(12) In
its
assessment
of
whether
the
measure
was
selective,
in
the flights' distance, but it fixed only two rates: one for
line with established case-law (
very short distance flights and the other for all other

7 ), the Commission first
identified the relevant tax system of reference, and
flights. That criterion seemed to favour flights within
thereafter analysed whether the measure constituted a
Ireland and to certain western parts of the United
derogation from that system and, if so, whether Ireland
Kingdom and, consequently, discriminated between
had demonstrated that the derogation was in the nature
national and intra-Union flights. In the case at hand,
and logic of the tax system.
the Irish authorities argued that a higher charge on the
destinations for which the lower rate applied would be
disproportional in relation to the price. The Commission
found that the price of tickets for domestic destinations
is not necessarily lower than that of flights to other
(13) It concluded that, in the case at hand, the system of
destinations in the Union. The lower tax rate did thus
reference is the taxation of air passengers departing
not appear to be justified by the nature and logic of the
from an airport situated in Ireland.
air travel tax system and therefore seemed to be a
selective measure.
(14) The
Commission
noted
that
the
air
travel
tax
system
provided for one general or normal rate applicable to
(19) Since all other criteria in Article 107(1) of the Treaty also
nearly all flights and a reduced rate for flights to a desti
seemed to be fulfilled, the measure appeared to constitute
nation located no more than 300 km from Dublin
State aid to the airline operators that had operated the
airport. It found that the normal rate constituted the
routes benefitting from the reduced rate.
( 5 ) OJ L 293, 31.10.2008, p. 3.
( 6 ) In the context of the infringement procedure, the Commission
(20)
provided its formal notice by letter of 18 March 2010, in which
The
aid
did
not
appear
to
fall
within
the
scope
of
any
it took the position that Ireland by the differentiation in air travel
guidelines for compatibility of State aid issued by the
tax rates failed to fulfil its obligations under Regulation (EC)
Commission. As it appeared to constitute an operating
No 1008/2008 and Article 56 of the Treaty. Following the letter
aid that discriminated between flights within the Union,
of formal notice, the Irish authorities amended the tax system.
it could not be considered to be compatible directly
( 7 ) See for example the judgments in Case C-88/2003 Portugal v
under Article 107(3)(c) of the Treaty. Furthermore, the
Commission [2006] ECR I-7115, paragraph 56, and in Case
C-487/2006 P British Aggregates v Commission [2008] ECR
aid did not fall within any other exemption specified in
I-10505, paragraphs 81-83.
Article 107(2) or (3) of the Treaty.

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Official Journal of the European Union
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(21) Consequently, the Commission had doubts as to the
realistic scenario in which the air travel tax could
compatibility of the aid measure with the internal
constitute aid is if the airlines operating routes to desti
market and, in accordance with Article 4(4) of Council
nations no more than 300 km from Dublin airport were
Regulation (EC) No 659/1999 of 22 March 1999 laying
obliged to collect the air travel tax at EUR 10, but were
down detailed rules for the application of Article 93 of
allowed to retain the difference between the EUR 10 rate
the EC Treaty ( 8 ), it decided to open the formal investi
and the EUR 2 rate. It was, however, not the case. In that
gation procedure, thereby inviting Ireland and other
regard, it is important to point out that the Irish auth
interested parties to submit their comments.
orities, in designing the tax in question, did not have in
mind any particular operator or business model.
4. COMMENTS FROM INTERESTED PARTIES
4.1.3. There is no advantage to Irish airline operators
(22) In response to the notice in the Official Journal ( 9 ), the
Commission received comments from the Irish auth
(27) First,
it
should
be
noted
that
Ireland
no
longer
has
orities and from Ryanair.
national air carriers per se, given that the State divested
its interest in Aer Lingus, which was originally the
national State airline operator, into a minority share
holding.
4.1. Comments from the Irish authorities
4.1.1. The tax is a tax on consumers
(28) If
the
tax
had
any
effect
on
Irish
airline
operators,
that
(23) The
Irish
authorities
state
that
the
nature
of
the
air
travel
effect would have been very different for each of those
tax is essentially a customer tax. For ease of application,
airline operators. The Irish authorities point out that the
the Irish authorities obliged each airline to pay to the
intra-Union routes that were subject to the higher rate of
Revenue service the relevant amount per passenger
EUR 10 were operated by predominantly the same Irish
departing from an Irish airport and carried by that
airlines. In the relevant period, the three airline operators
airline. The airline operators are, however, allowed to
held about [93-97] (*) % of the market for flights to
pass on the tax and collect it from their passengers.
which the lower rate applied, but they also predominated
in the intra-Union air travel market, holding [82-87] (*)
% of all such intra-Union flights.
(24) Moreover, the air travel tax is normally listed in the ticket
price and/or in the general terms and conditions of
operators as a tax or levy, in conjunction with other
(29) In particular, the Irish authorities argue that any
charges and taxes. Accordingly, the tax does not confer
disadvantage claimed by Ryanair is clearly unsustainable,
a benefit on any airline operators since it is merely
since Ryanair accounts for approximately [56-63] (*) %
another levy, tax or charge which is effectively charged
of the passengers carried on the routes to which the
to the consumer.
lower rate was applicable (see Table 1).
4.1.2. Absence of benefit to particular operators
Table 1
(25) The Irish authorities state that the conferring of a benefit
Market shares of Irish airline operators on routes departing
on particular operators is a prerequisite for the air travel
from Irish airports
tax to fall within the definition of Article 107(1) of the
Treaty. According to the Irish authorities in a situation
Market shares
where the air travel tax is essentially a consumer tax,
whether applied at EUR 10 or EUR 2, it might be
No more than
More than
300 km
300 km ( 1 )
difficult to see how the tax confers a benefit on particular
operators.
Ryanair [56-63]
(*)
% [42-47]
(*)
%
Aer Lingus [16-23]
(*)
% [35-40]
(*)
%
Aer Arann [10-17]
(*)
% [0,5-2,5]
(*)
%
(26) There
is
no
dispute
that
all
operators,
whether
they
are
obliged to charge the EUR 10 or the EUR 2 tax rate, are
TOTAL [93-97]
(*)
% [82-85]
(*)
%
placed on an equal footing. The question that arises is
whether an advantage is conferred on the airline
( 1 ) Exclusively within the Union.
operators who only have to charge the EUR 2 tax rate
Source: Information provided by Ireland based on figures provided by
collectively. According to the Irish authorities, the only
the three Irish airline operators and data extracted from the
Central Statistics Office.
( 8 ) OJ L 83, 27.3.1999, p. 1.
( 9 ) See footnote 1.
(*) Due to a business secret, a range is used.

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(30) Table
1 shows
that
the
only operator
which
might
nature, it had no perceptible effect on airline operators.
conceivably be classified as a national operator by
Second, the differentiated tax rates did not distinguish the
virtue of the State's minority interest (Aer Lingus) had
Irish market from that of other Member States. Of the
a much greater share of flights to which the higher rate
flights to which the lower rate applied, the vast majority
applied ([35-40] (*) %) than of flights to which the lower
were non-domestic (68 % compared to 32 % for purely
rate applied ([16-23] (*) %). Therefore, if the lower tax
domestic flights). Third, the airline operators are active
rate had had any effect on airlines, Aer Lingus would
on a market which is open for competition, which means
have been significantly disadvantaged.
that the market was open for new entrants to which the
lower tax rate applied on the same conditions as for
other airline operators. If the lower tax rate had
conferred a benefit on certain operators, non-Irish
airlines would presumably have chosen to operate
(31) As
for
Aer
Arann,
which
the
complainant
also
claims
benefits from the alleged aid, the Irish authorities note
routes to which the lower rate applied. The absence of
that, between 2007 and 2010, it experienced a
new entrants indicates that the lower rate did not confer
significant reduction in both turnover and passenger
an advantage on certain airline operators.
numbers. Following the introduction of the tax, Aer
Arann reported losses of EUR 18 million. It therefore
appears that the airline was at its most profitable
before the introduction of the tax. The Irish authorities
4.1.6. Any aid would be de minimis aid or have a negligible
also point out that there was only one domestic route on
effect on the airline operators involved
which the complainant and Aer Arann competed and
that, on that route, close to [37-42] (*) % of the flights
(35) The Irish authorities claim that, even if the lower tax rate
were operated by the complainant. For flights to desti
was to be regarded as State aid within the meaning of
nations abroad benefiting from the lower rate (western
Article 107(1) of the Treaty, it should be declared to be
United Kingdom), the complainant operated more than
compatible with the internal market, since it would either
[37-42] (*) % of the scheduled flights, while Aer Arann
be de minimis aid or would anyway have a negligible
and Aer Lingus had smaller shares.
effect on the airline operators involved.
4.2. Comments from third parties
(32) Moreover,
non-Irish
airline
operators
have
always
been
free to operate flights to which the lower tax rate applied.
4.2.1. Ryanair
There was no discretion for the State in this context. The
Irish authorities argue that, if there was an advantage in
(36) With
respect
to
the
State
aid
nature
of
the
lower
tax
rate,
operating flights to which the lower tax rate applied,
Ryanair agrees with the preliminary view which the
foreign (non-Irish) operators would have chosen to
Commission expressed in its decision of 13 May 2011
operate such flights. The absence of foreign airlines
that the lower tax rate conferred an advantage on certain
operating such flights suggests that there was no
airline operators and constitutes State aid within the
advantage stemming from the lower rate.
meaning of Article 107(1) of the Treaty. However,
Ryanair disagrees with the Commission's view that (i)
the higher rate of EUR 10 is to be considered as the
"normal" rate, and that (ii) Ryanair obtained an
4.1.4. The lower rate was introduced in order to avoid
advantage through the measure.
applying a tax rate which was disproportionate in
relation to the ticket price
(33) The Irish authorities stress that the purpose of the differ
(37) With
respect
to
the
establishment
of
the "normal" or
entiation in rates was to introduce an element of propor
"standard" rate under the tax system, Ryanair claims
tionality in the level of the tax relating to distance, since
that the Commission's view that the higher rate of
prices are normally lower for closer destinations. While it
EUR 10 is the normal rate and that all operators to
is accepted that there is not a perfect correlation between
which the lower rate of EUR 2 applied obtained an
distance and price, it was felt that the correlation was
advantage, is arbitrary. According to Ryanair, there is
sufficient to justify splitting the tax into two tiers. The
no reason why the higher rate, and not the lower,
Irish authorities consider that a mechanism providing a
should be seen as the normal rate. Moreover, since the
more precise differentiation on the basis of distance
two-tier rate has been replaced by a single rate, the new
would have rendered the system extraordinarily
rate is likely to be a blend between the initial rates.
complicated and administratively burdensome.
Therefore, the new rate would be the reasonable
benchmark to assess any potential harm or benefits
arising from the two-tier system.
4.1.5. No distortion of competition
(34) The
Irish
authorities
argue
that
the
lower
tax
rate
did
not
(38) Ryanair
further
claims
that
the
two-tier
air
travel
tax
did
result in any distortion of competition and had no effect
not confer an advantage on Ryanair. When examining a
on trade. First, since the tax was a consumer tax in
measure that may constitute State aid, the Commission

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Official Journal of the European Union
30.4.2013
must take into consideration its overall effects on the
higher rate applied to between 85 and 90 % of all depar
potential beneficiary and, in particular, deduct any
tures. The Irish authorities reiterated that they had
specific charges that burden the advantage conferred by
allowed for a derogation from the standard rate of
the alleged aid. During the period when the two-tier tax
EUR 10 in order to introduce an element of propor
system applied, Ryanair paid the taxes specified in
tionality in the level of the tax relating to the distance.
Table 2.
5. ASSESSMENT
Table 2
5.1. Existence of State aid under Article 107(1) of
Passengers carried and tax paid during the period 30 March
the Treaty
2009 until 1 March 2011
(41) By
virtue
of
Article
107(1)
of
the
Treaty
“any aid granted
by a Member State or through State resources in any form
Destination category Passengers
whatsoever which distorts or threatens to distort competition by
from Dublin airport
subject to
Tax paid Share
tax
favouring certain undertakings or the production of certain
goods shall, in so far as it affects trade between Member
No more than
[…] (*) EUR
[…]
(*) [0,5-2,5]
(*)
%
States, be incompatible with the internal market.”
300 km within the
State (EUR 2 rate)
No more than
[…] (*) EUR
[…]
(*) [1,5-4,5]
(*)
%
300 km outside the
S e l e c t i v i t y
State (EUR 2 rate)
(42) In
order
to
be
caught
by
Article
107(1)
of
the
Treaty,
a
More than 300 km
[…] (*) EUR
[…]
(*) [93-98]
(*)
%
measure must thus be selective ( 11 ). In establishing
within the EU
whether a measure is selective, the Commission needs
to assess whether the measure favours ‘certain under
More than 300 km
[…] (*) EUR
[…]
(*) [0,3-2,5]
(*)
%
takings or the production of certain goods’ in
outside the EU
comparison with others which, in the light of the
objective pursued by that regime, are in a comparable
TOTAL […]
(*) EUR
[…]
(*) 100
%
factual and legal situation ( 12 ). According to established
case-law ( 13 ), a fiscal measure is prima facie selective if it
constitutes a departure from the normal application of
(39) Since Ryanair considers that the new single rate of EUR 3
the general tax framework.
should be considered as the normal rate, Ryanair should,
during the period from 30 March 2009 until 1 March
2011, have been liable to pay an amount of EUR
[…] (*) ( 10 ) in air travel tax. This is EUR […] (*) less
(43) First,
the Commission therefore has to identify the
than the amount actually paid (see Table 2). Ryanair
relevant tax system of reference. As regards taxation,
thus argues that it did not enjoy any benefit from the
the Commission notes that, in principle, the definition
lower tax, but rather suffered a disadvantage.
of the system of taxation falls within the exclusive
competence of the Member States. In designing their
taxation system, the Irish authorities chose to define
the taxable event of the air travel tax as the departure
4.3. Observations by Ireland on the third party
of a passenger on an aircraft from an airport situated in
comments
Ireland. The system of reference is therefore the taxation
of air passengers departing on an aircraft from an airport
(40) On
13
January
2012,
the
Irish
authorities
provided
their
in Ireland. The objective of that system is to raise revenue
views on Ryanair's comments: First, they disagree with
for the State budget. The conclusion that the system of
Ryanair's description of the tax, since the tax in their
reference is the taxation of air passengers departing from
view is a consumer tax in essence and the lower tax
an airport situated in Ireland was confirmed by the Irish
rate did not confer an advantage on the airlines.
authorities in their reply to the observations of the third
Second, they fail to see how Ryanair could be the party
party.
most directly and negatively affected by the lower rate, in
particular since it accounts for [56-63] (*) % of the
( 11 ) See Case C-66/02 Italy v Commission [2005] ECR I-10901,
passengers carried on flights subject to the lower rate.
paragraph 94.
Third, there is no basis for the claim that the lower tax
( 12 ) See for example Cases C-143/99 Adria-Wien Pipeline and Wieters
rate was designed to support Aer Arann. The Irish auth
dorfer & Peggauer Zementwerke [2001] ECR I-8365, paragraph 41,
C-308/01 GIL Insurance and Others [2004] ECR I-4777, paragraph
orities did not have any particular operator in mind
68, and C-172/03 Heiser [2005] ECR I-1627, paragraph 40,
when designing the air travel tax. Fourth, there is no
C-88/03 Portugal [2006] ECR I-7115, paragraph 54, and
logic in Ryanair's argument that the higher rate of
C-169/08 Presidente del Consiglio dei Ministri v Regione Sardegna
EUR 10 is not to be considered as the normal rate of
[2009] ECR I10821, paragraph 61.
the air travel tax. Under the two-tier tax system, the
( 13 ) See for example the judgments in Case T-210/02 RENV British
Aggregates Association v Commission, [2006] ECR II-2789,
paragraph 107, and Cases C-88/03 Portugal, paragraph 56, and
( 10 ) EUR 3 multiplied by […] (*) passengers
C-487/06 P British Aggregates [2008], paragraphs 81-83.

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(44) Second, in line with established case-law
( 14 ), the
example, noise and pollution) was precisely the same
Commission has to determine whether the tax measure
regardless of the destination of the flight and the
in question constitutes a derogation from the identified
distance travelled. The concerned airline operators were
reference system.
therefore in the same as each other legal and factual
situation with regard to that objective.
(45) Ryanair
argues
that
the
lower
rate
of
EUR
2,
or
alter
natively the single rate of EUR 3 which was introduced
(48) Furthermore,
the
tax
system
is
not
characterised
by
an
on 1 March 2011, should be regarded as the normal rate
articulated differentiation in the tax level in relation to
of the air travel tax system. However, apart from certain
the actual length of the flights. First, the tax rate was not
destinations in the western United Kingdom, the lower
applicable on the basis of the actual length of the flight,
rate only applied to domestic destinations and, according
but on the basis of the distance between Dublin airport
to the Irish authorities, only to some 10-15 % of all
and the destination, regardless of where the actual
flights which were subject to the tax. It can thus not
departure took place. Second, the tax system fixes only
be regarded as the normal tax rate. As for the rate of
two rates: one for very short distance flights from Dublin
EUR 3, it was not in force at the time to which this
airport and the other for all other flights.
Decision relates and can therefore not be regarded as
the normal rate of the air travel tax system at that
time. Therefore, the Commission finds that the higher
rate of EUR 10 was the normal rate of the reference
system, while the reduced rate of EUR 2, which was
(49) Moreover, even if the reason for the derogation was in
applicable to a well delimited category of flights, was
the nature and logic of the principles of the air travel tax
an exception from the reference system.
system, the Court has stated that a benefit must be
consistent not only with the inherent characteristics of
the tax system in question but also as regards the manner
in which it is implemented ( 17 ). As mentioned in recital
47, the tax system did not de facto ensure proportionate
(46) Third,
the Commission must examine whether such
rates in relation to the actual length of the flights, since
exceptions are justified by "the nature or general
the applicable rate was fixed on the basis of the distance
scheme of the system" ( 15 ) in the Member State. If that
between Dublin airport and the destination, regardless of
is the case, the measure is not considered to confer a
where the actual departure took place and since only two
selective advantage and does thus not constitute State aid
rates were applicable: one for very short distance flights
within the meaning of Article 107(1) of the Treaty. In
from Dublin airport and the other for all other flights.
that context, it should be noted that, according to case-
The price of tickets to domestic destinations is not
law ( 16 ), it is the basic and guiding principles of the
necessarily lower than that of flights to other destinations
reference system which are relevant, not those of the
in the Union. The measure could thus not achieve its
particular measure in question.
objective of ensuring proportionality of taxation in
relation to the flight distance. In this case, neither the
Irish authorities nor any third party has argued that the
effect of the derogation was that the tax level de facto was
proportional to distance. On the contrary, the Irish auth
orities recognise that there was no perfect correlation
(47) According to the Irish authorities the lower rate was
introduced in order to add an element of proportionality
between distance and rate of the tax.
in the level of the tax relating to the distance of the
flight. The Commission finds that reasoning is not
related to the basic and guiding principles of the tax
system itself, but rather to those of the derogation
itself. The structure and objective nature of the tax was
(50) Therefore,
the
Commission
sees
no
reason
for
changing
not related to the distance of the flight, but to the fact of
its preliminary view that the lower rate was not in the
departing from an Irish airport. The connection with the
logic and general scheme of the air travel tax system.
fiscal authority, the taxable event (departure from an Irish
Accordingly the Commission considers that the
airport) and the negative externalities for the Irish society
measure is selective and not justified by the nature and
of passengers departing from an Irish airport (for
the logic of the system.
( 14 ) See footnote 12 above.
( 15 ) See for example Case C-173/73 Italy v Commission [1974] ECR-709,
as well as point 13 et seq. of Commission Notice on the application
of the state aid rules to measures relating to direct business
A d v a n t a g e
taxation, OJ C 384, 10.12.1998, p. 3.
( 16 ) See for example judgements in joined Cases C-78/08 to C-80/08
(51) Expenditure for taxes constitutes costs which are
Amministrazione delle finanze Agenzia delle Entrate v Paint Graphos scarl
normally borne by an undertaking.
Adige Carni scrl, in liquidation, v Ministero dell'Economia e delle Finanze,
Agenzia delle Entrate and Ministero delle Finanze v Michele Franchetto,
not reported, in particular paragraph 69, as well as in Case
( 17 ) See for example judgment in Joined Cases C78-C-80/08,
T-210/02, paragraph 107.
paragraph 73.

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L 119/36
EN
Official Journal of the European Union
30.4.2013
(52) The
application
of the air
travel
tax can affect
the
stemming from the application of the lower tax rate of
revenues of the airlines which have to pay that tax, by
EUR 2 is the difference between that rate and the
increasing the prices of the tickets they are capable of
standard rate of EUR 10. In applying the lower rate to
offering to their customers or reducing the margin on
certain flights, Ryanair has, like all other airlines
each ticket they sell, where the airlines decide not to pass
operating flights to which that rate applied, enjoyed an
the tax on to the customers. In this respect, the Court
advantage corresponding to the difference between the
has stated that "since airport taxes directly and automatically
two rates.
influence the price of the journey, differences in the taxes to be
paid by passengers will automatically be reflected in the
transport costs, and thus, […], access to domestic flights will
be favoured over access to intra-Community flights" ( 18 ).
(57) The
Irish
authorities
argue
that
the
tax
was
intended
to
be passed on to the passengers and, therefore, no
advantage existed at the level of the airline operators.
In that context, the Commission notes that a reduction
(53) A
reduced
rate
for
a
certain
type
of
flights
therefore
has
a
from the normal rate of a given tax can confer a selective
smaller effect than the normal rate on the airline
advantage on the airline operator which is liable to pay
operators offering that type of flights. Those airline
the reduced rate even in situations where there is a legal
operators are relieved from a cost they would normally
requirement to pass the tax in question on to the
have to bear, and therefore have a smaller cost to pass on
customers (
to their customers or to assume themselves.

19 ) The Commission further notes that, in

the case at hand, there was no mechanism which
ensured that the tax was actually passed on, but it was
left to the airline operator to decide on whether and how
the tax would be passed on to the passengers. In its
(54) Accordingly, the Commission finds that the lower tax
complaint, the complainant actually argued the
rate provided an advantage to airline operators serving
contrary, namely that it could not pass the cost of the
the routes to which that rate applied. The lower cost that
tax on to its customers since doing that would have had
they had to pass on to their customers or to assume
a disproportionate effect on its ticket prices. The
directly represented financial resources that those airline
Commission therefore does not agree with the Irish auth
operators could economise and therefore improved their
orities that there was no advantage at the level of the
economic situation vis-à-vis other airline operators
airline operators: those which could use the lower tax
competing in the air transport market. The advantage
rate for certain flights had a lower cost to pass on to
corresponds to the difference between the lower rate of
their customers than others. It is also in line with the
EUR 2 and the normal tax rate of EUR 10 during the
Commission's practice with respect to aid measures
period between 30 March 2009 and 1 March 2011.
stemming from an excise duty ( 20 ), according to which
The Commission notes that the flights to which the
reliefs from such duties have been found to provide an
lower rate applied were mainly operated by airline
advantage to the airline operator which is obliged to pay
operators with a strong connection with Ireland (Aer
the tax, regardless of the fact that that entity may choose
Lingus, Aer Arann and Ryanair were set up in Ireland
to pass the cost on to its customers.
and still have their headquarters there). Therefore, de
facto the reduced rate provided an advantage to Irish
airline operators compared to other Union operators.
(58) Accordingly, the Commission finds that the lower tax
rate provided an advantage to certain airline operators.
The advantage corresponds to the difference between the
(55) The
Commission
cannot
accept
Ryanair's
argument
that
lower rate of EUR 2 and the normal tax rate of EUR 10
the advantage was limited to the difference between the
during the period between 30 March 2009 and 1 March
lower rate and the rate of EUR 3 which was introduced
2011. The flights to which the lower rate applied were
on 1 March 2011. Such a rate did not apply at the same
mainly operated by airlines with a strong connection
time as the lower rate and if an advantage is defined in a
with Ireland (Aer Lingus, Aer Arann and Ryanair).
system with one lower tax rate and one high, applying a
Therefore, the reduced rate provided an advantage to
benchmark that is set somewhere in between those rates
Irish airline operators compared to other Union oper
does not catch the entire advantage which has been
ators.
granted.
( 19 ) See for example Case C-143/99, in particular paragraphs 5, 54
and 55.
( 20 ) See Commission Decision C(2007) 754 on State aid case
N 892/2006 – FI – Amendment to differentiated energy tax
(56) Ryanair
furthermore
argues
that
it
has
benefitted
less
scheme, OJ C 109, 15.5.2007, p. 1; Commission Decision
from the lower tax rate than, for example, Aer Arann,
C(2007) 2416/2 on case N 775/2006 – DE – Reduced tax rates
since the majority of its flights are for destinations to
for the manufacturing industry, agriculture and forestry, etc.,
which the higher rate applied. However, the advantage
OJ C 152, 6.7.2007, p. 3; Commission Decision C(2005) 1815/3
on case N 190/A/2005 – UK – Modification of the climate change
levy, OJ C 146, 22.6.2006, p. 8; and Commission Decision
( 18 ) See for example Case C-92/01 Georgios Stylianakis v Elliniko Dimosio
C(2009) 8093/2 on case N 327/2008 – DK – NO X tax reductions
[2003] ECR I-1291, paragraph 28, and Case C-70/99 Commission v
for large polluters and companies reducing pollution and tax
Portugal [2001] ECR I-4845, paragraph 20.
reductions for biogas and biomass, OJ C 166, 25.6.2010, p. 1.

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EN
30.4.2013 Official
Journal
of
the
European
Union L
119/37
S t a t e r e s o u r c e s a n d i m p u t a b i l i t y
under Article 108(3) of the Treaty. The aid measure thus
constitutes unlawful State aid.
(59) The
fact
that
the
Irish
authorities
allowed
a
lower
tax
rate
than the normal one to be applied resulted in a loss of
tax revenue for the State and was thus financed from
State resources. Since the lower rate had been decided
upon by the national authorities, the measure is
5.3. Compatibility of the aid with the Treaty
imputable to the State.
(64) According
to
Article
107(3)(c)
of
the
Treaty,
aid
may
be
considered to be compatible with the internal market if it
aims at facilitating the development of certain economic
E f f e c t o n c o m p e t i t i o n a n d t r a d e b e t w e e n
activities or of certain economic areas, where such aid
M e m b e r S t a t e s
does not adversely affect trading conditions to an extent
contrary to the common interest. As the aid constituted
(60) In comparison with their competitors, the airline
operating aid, reducing certain airline operators' current
operators benefiting from the lower rate were relieved
expenditure, it is, according to the case-law of the Court,
from costs which they should otherwise have borne or
in principle incompatible with the internal market ( 26 ).
passed on to their customers. Therefore, the lower rate of
The aid does not fall within the scope of any guidelines
the air travel tax improved their economic situation vis-à-
for compatibility of State aid issued by the Commission
vis other undertakings competing in the air transport
in this context. In particular, it is not covered by the
market thereby distorting or risking to distort
Community guidelines on financing of airports and
competition.
start-up aid to airlines departing from regional
airports ( 27 ), since it is not linked to the start-up of
certain routes. The Irish authorities have not argued or
provided any information to show that the aid could be
(61) When
aid
granted
by
a
Member
State
strengthens
the
considered to be compatible pursuant to the Community
position of an undertaking compared with other under
guidelines on State aid for environmental protection ( 28 ).
takings competing in intra-Union trade, the latter must
On the contrary, they have made clear that the objective
be regarded as affected by that aid ( 21 ). It is sufficient that
of the tax is to raise revenue and not to protect the
the recipient of the aid competes with other undertakings
environment. The fact that the tax in question lacks
on markets open to competition ( 22 ). The air transport
any clear or proportional link to the reduction of
sector is characterised by intense competition between
energy use, of pollution or gas emissions, of noise
operators from different Member States, in particular
levels, etc., supports that reasoning. Therefore, the
since the entry into force of the third stage of liberali
Commission does not find the aid compatible with the
sation of air transport ("third package") on 1 January
internal market under Article 107(3)(c) of the Treaty.
1993, namely Council Regulation (EEC) No 2407/92 of
23 July 1992 on licensing of air carriers ( 23 ), Council
Regulation (EEC) No 2408/92 of 23 July 1992 on
access for Community air carriers to intra-Community
(65) The
aid
in
question
does
not
fall
within
any
other
air routes
( 24 ) and Council Regulation (EEC)
exemption specified in Article 107(2) or (3) of the
No 2409/92 of 23 July 1992 on fares and rates for air
Treaty.
services ( 25 ). The reduced rate was therefore capable of
affecting trade between Member States since it
strengthened the position of some airline operators
competing in a market which is fully liberalised at
Union level.
(66) Furthermore,
even
if
the
aid
was
compatible
with
any
of
the exceptions specified in under Article 107(2) or (3) of
the Treaty, which is not the case, the Court has stated
that the procedure under Articles 107 and 108 of the
(62) Since all the criteria in Article 107(1) of the Treaty are
Treaty must never produce a result which is contrary to
fulfilled, the measure constitutes State aid to all airline
specific provisions of the Treaty. The Court has also held
operators that operated flights benefitting from the
that those aspects of aid which contravene specific
reduced rate.
provisions of the Treaty other than Articles 107 and
108 may be so indissolubly linked to the object of the
aid that it is impossible to evaluate them separately ( 29 ).
In this particular case, as described in recital 10, the
5.2. Legality
differentiated rates were subject to an investigation by
(63) By
failing
to
notify
the
measure
before
its
implemen
tation, the Irish authorities did not fulfil their obligations
( 26 ) Case T-459/93 Siemens SA v Commission, ECR [1995] II-1675,
paragraph 48. See also judgment in Case T-396/08 Freistaat
Sachsen et Land Sachsen-Anhalt v Commission [2010] ECR (appealed),
( 21 ) See in particular, Case 730/79 Philip Morris v Commission [1980]
paragraphs 46-48, Case C-156/98 Germany v Commission [1980]
ECR 2671, paragraph 11, Case C-53/00 Ferring [2001] ECR I-9067,
ECR I-6857, paragraph 30 and case-law cited therein.
paragraph 21, and Case C-372/97 Italy v Commission [2004] ECR
( 27 ) OJ C 312, 9.12.2005, p. 1.
I-3679, paragraph 44.
( 28 ) OJ C 82, 1.4.2008, p. 1.
( 22 ) Case T-214/95 Het Vlaamse Gewest v Commission [1998] ECR II-717.
( 29 ) See for example judgments in Cases C-225/91 Matra v Commission
( 23 ) OJ L 240, 24.8.1992, p. 1.
[1993] ECR I-3203, paragraph 41, and T-156/98 RJB Mining v
( 24 ) OJ L 240, 24.8.1992, p. 8.
Commission [2001] ECR II-337, paragraph 112, and case-law cited
( 25 ) OJ L 240, 24.8.1992, p. 15.
therein.

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L 119/38
EN
Official Journal of the European Union
30.4.2013
the Commission, which found that they were in breach
(71) In
accordance
with
Article 14(1) of Regulation
(EC)
of Regulation (EC) No 1008/2008 and Article 56 of the
No 659/1999, where negative decisions are taken in
Treaty on the freedom to provide services, since the
cases of unlawful aid, the Commission must require
differentiation imposed more onerous conditions on the
that the Member State concerned to take all necessary
operation of intra-Union air services than those imposed
measures to recover the aid from the beneficiaries.
on domestic services. The Court has explicitly stated in
Ireland should therefore be required to recover the
cases concerning airport taxes that the Treaty provisions
incompatible aid,
on freedom to provide services are also applicable to the
transport sector ( 30 ). In this case, the State aid stems from
the differentiation in tax rates itself. As the tax and the
aid constitute two elements of the one and same fiscal
HAS ADOPTED THIS DECISION:
measure, they are inseparable ( 31 ) and therefore the State
aid cannot be granted without being in breach of the
principle of the freedom to provide services.
Consequently, the aid cannot be declared compatible
Article 1
with the Treaty in any case because it would inevitably
infringe the provisions of Regulation (EC) No 1008/2008
The State aid in the form of a lower air travel tax rate applicable
and Article 56 of the Treaty.
to all flights operated by aircraft capable of carrying more than
20 passengers and not used for State or military purposes,
departing from an airport with more than 10 000 passengers
per year to a destination located no more than 300 km from
(67) Consequently,
the
Commission
concludes
that
the
aid
Dublin airport between 30 March 2009 and 1 March 2011, in
cannot be considered as compatible with the Treaty.
application of section 55 of the Finance (No. 2) Act 2008,
unlawfully put into effect by Ireland in breach of Article 108(3)
of the Treaty, is incompatible with the internal market.
6. CONCLUSION
(68) The Commission finds that the lower rate of the air
Article 2
travel tax for flights to a destination located no more
than 300 km from Dublin airport provided for by
Individual aid granted under the scheme referred to in Article 1
Section 55(2) of the Finance (No. 2) Act, and in
does not constitute aid if it fulfils the conditions laid down by a
particular Article 2(b) thereof, for the period from
regulation adopted pursuant to Article 2 of Council Regulation
30 March 2009 until 1 March 2011 constitutes State
(EC) No 994/98 ( 32 ).
aid within the meaning of Article 107(1) of the Treaty.
Ireland unlawfully implemented that State aid in breach
of Article 108(3) of the Treaty.
Article 3
Individual aid granted under the scheme referred to in Article 1
which, at the time it is granted, fulfils the conditions laid down
(69) The
State
aid
is
not
in
compliance
with
any
derogation
as
by a Regulation adopted pursuant to Article 1 of Regulation
provided for by Article 107(2) and (3) of the Treaty.
(EC) No 994/98 or by a Commission decision approving an aid
Since no other reasons for compatibility can be
scheme is compatible with the internal market, up to the
envisaged for the measure at hand, it is incompatible
maximum aid intensities applicable to that type of aid.
with the internal market.
Article 4
(70) The
State
aid
amounts
to
the
difference
between
the
lower rate of the air travel tax and the standard rate of
1. Ireland
shall
recover
the
incompatible
aid
granted
under
EUR 10 (that is to say, EUR 8 per passenger) levied on
the scheme referred to in Article 1 from the beneficiaries.
each passenger. This concerns all flights operated by
aircraft capable of carrying more than 20 passengers
and not used for State or military purposes, departing
from an airport with more than 10 000 passengers per
2. The sums to be recovered shall bear interest from the date
year to a destination located no more than 300 km from
on which they were put at the disposal of the beneficiaries until
Dublin airport. The beneficiaries are Ryanair, Aer Lingus,
their actual recovery.
Aer Arann and other air carriers to be identified by
Ireland.
( 30 ) See Cases C-92/01 Georgios Stylianakis v Elliniko Dimosio, paragraph
3. The
interest
shall
be
calculated
on
a
compound
basis
in
23, and C-70/99 Commission v Portugal [2001] ECR I-4845,
accordance with Chapter V of Commission Regulation (EC)
paragraph 27 and 28, as well as Case C-49/89 Corsica Ferries
No 794/2004 ( 33 ).
France v Direction Générale des Douanes Franaises [1989] ECR
4441, paragraph 10.
( 31 ) Case C-526/04, Laboratoires Boiron v ACOSS [2006] ECR I-7529,
( 32 ) OJ L 142, 14.5.1998, p. 1.
paragraph 45.
( 33 ) OJ L 140, 30.4.2004, p. 1

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EN
30.4.2013 Official
Journal
of
the
European
Union L
119/39
Article 5
(d) documents demonstrating that the beneficiaries have been
ordered to repay the aid.
1. Recovery
of
the
aid
granted
under
the
scheme
referred
to
in Article 1 shall be immediate and effective.
2. Ireland
shall
keep
the
Commission
informed
of
the
progress of the national measures taken to implement this
2. Ireland
shall
ensure
that
this
Decision
is
implemented Decision until recovery of the aid granted under the scheme
within four months following the date of notification of this
referred to in Article 1 has been completed. It shall immediately
Decision.
submit, on simple request by the Commission, information on
the measures already taken and planned to comply with this
Article 6
Decision. It shall also provide detailed information concerning
the amounts of aid and recovery interest already recovered from
1. Within
two
months
following
the
notification
of
this the beneficiaries.
Decision, Ireland shall submit the following information:
Article 7
(a) the list of beneficiaries that have received aid under the
scheme referred to in Article 1 and the total amount of
This Decision is addressed to Ireland.
aid received by each of them under the scheme;
Done at Brussels, 25 July 2012.
(b) the total amount (principal and recovery interests) to be
recovered from each beneficiary;
For the Commission
(c) a detailed description of the measures already taken and
Joaquín ALMUNIA
planned to comply with this Decision;
Vice-President

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