The Commission authorizes a budget increase of the German tax reduction scheme for flights to Northern Sea islands

In February 2020, the Commission approved the increase of the budget for the German tax reduction scheme for flights to and from the North Sea islands. The scheme, set up in 2012, allows passengers to be exempted from 80% of the air transport tax imposed on all passengers departing from German airports and aims to improve connectivity between these islands and the mainland.

On 6 February 2020, the Commission declared compatible with EU State aid legislation the budget increase of the existing German aid scheme granting passengers flying to or from certain North Sea islands an 80% reduction on the air transport tax levied on each passenger departing from a German airport. This scheme had been authorized by the Commission on the basis of Article 107. 3, c) of the Treaty on the Functioning of the EU in December 2012.

The decision was recently published and is available on the Commission’s website (SA. 55902).

The tax reduction applies to flights to and from the North Sea islands (i.e. German, Dutch or Danish islands in the North Sea which are only accessible by sea and are located more than 100 kilometers from the North Sea coast or the Baltic Sea coast). All passengers aboard these flights (residents of the islands as well as tourists or workers) can benefit from this tax reduction as it aims to improve connectivity between these islands and the mainland.

The terms of this state aid scheme remain the same, the only amended feature notified by Germany is the increase of the scheme budget. This increase follows from the adoption of the German Climate Action Program 2030 aiming at implementing several measures in order to incentivize citizens to act in a more environmentally responsible manner. In the transport sector, these include for instance the increase of the air transport tax, the introduction of a series of new traffic laws giving priority to bicycles over cars and an increase in the number of public charging points for electric vehicles to one million by 2030.

Hence, the air transport tax applicable to all flights departing from German airports of EUR 7.50 per passenger was increased to EUR 13.03 per passenger on 1 April 2020. This in turn led to an increase of the aid amount under the tax reduction scheme and so also led to an increase of the global budget of the aid scheme. On 6 December 2019, Germany therefore notified the Commission of its intention to raise the budget, of EUR 1,000,000, to EUR 2,000,000. On 2 February 2020, the Commission declared the increase of the aid budget compatible with EU state aid rules as it does not undermine the environmental aim of the air transport tax and it is necessary and proportionate.