European Commission - Press release
State aid: Commission clears German tax exemption for flights to and from North Sea islands
Brussels, 29 June 2011 - The European Commission has authorised, under the EU Treaty’s rules on State aid, a plan by the German government to exempt selected groups of passengers to and from certain German islands from a newly-created tax on air transport. This is to avoid penalising islanders who already pay more comparatively for air travel.
"Whilst State aid rules should be strictly implemented to ensure an undistorted air transport market, this decision demonstrates that it is possible to have aid of a social character provided it benefits individuals and not specific undertakings", noted Joaquín Almunia, Vice-President of the Commission and Commissioner for Competition.
The measure is an exemption from a new German air transport tax. Since 1 January 2011 all passengers departing from a German airport are subject to an air transport tax, the amount of which depends on their final destination. For domestic destinations and all EU and EEA destinations, the tax is €8 per passenger.
The exemption is limited to residents of the islands. It also applies to medical flights and civil servants working on the islands. The island must not have a rail or road connection to the mainland which is independent of the tide. The point of departure or arrival on the mainland must also not be more than 100 km away from the North Sea coast or the Baltic sea coast, or it must be on another island. In other words, the aid is limited for flights to and from islands that face a connectivity problem due to ferries that can only run at high tide and in good weather conditions.
The islands which will benefit from the tax exemption under the said conditions are: Juist, Norderney, Helgoland, Baltrum, Langeoog, Wangerooge, Borkum.
Germany agrees to extend the tax exemption to flights between the domestic islands and other EEA destinations.
Article 107(2)(a) of the Treaty on the Functioning of the European Union permits aid of a social character, providing that it is granted to individuals on the basis of conditions where there is no discrimination related to the origin of the products or services concerned.
The German tax exemption is in line with the Commissions' decision practice that residence on an island may be regarded as a social handicap. Germany requires passengers to prove their eligibility to the scheme. The annual budget for the aid is estimated to be around €120 000.
The non-confidential version of the decision will be made available under the case number SA.32888 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.