German Air Travel Tax (ATT): No Lessons Learned from the Dutch Ticket Tax

On 26 November 2010, Germany's Federal Council consented to the Parliament's plans to introduce an Air Travel Tax (Luftverkehrsteuer/LuftVSt - ATT) by way of the new Air Travel Tax Act - (Luftverkehrsteuergesetz/LuftVStG - ATTA). The new law entered into force beginning of this year - on 01 January 2011. Regardless of the new ATT only taking effect as of this year, flights booked on or after 01 September 2010 departing on or after 01 January 2011 were already subject to the new tax, provided the tangible flight actually starts from a domestic German airport. Therefore, ATT is only payable once the trip from a German airport has actually begun, irrespective when the aircraft ticket was purchased (provided this occurred after 31 August 2010). By means of the ATT, the German Government endeavours to bring forward the expected earnings from the EU Emissions Trading Scheme (ETS) in the year 2012 and onwards. Similar to European Union Emissions Trading Scheme (EU ETS), foreign carriers are subject to the new tax as well, which causes comparable concerns as regards customary international law and the Chicago Convention, for example. Actually the legal repercussions go beyond that since it can well be argued that the new tax is also a violation of the German Constitution and not in line with European State aid law, see Articles 107 and 108 Treaty on the Functioning of the European Union (TFEU). During the political discussion prior to the cabinet's decision, it has been indicated that the tax will disappear as soon as aviation is included into the EU ETS. The tax bill now stipulates that the expected revenues are Euro (EUR) 1 billion and that the tax rates can only be reduced in relation to the earnings from EU ETS. Therefore, a good German tradition seems to be upheld: a tax once established is meant to stay - if not challenged in a court of law.