State aid: Commission approves budget increase for two schemes reducing the air travel tax for flights to and from small islands in Germany

The European Commission has approved, under EU State aid rules, budget increases for two existing German aid schemes supporting respectively the reduction and the exemption of the air travel tax applicable to flights to and from small islands in Germany. The amendments to the existing schemes consist in a budget increase of €150,000 to finance an air travel tax exemption for people living on small domestic islands, and a €1 million budget increase to finance an 80% air travel tax reduction applying to all other passengers flying to and from these islands. The schemes, which were originally approved by the Commission under EU State aid rules in 2011 and 2012 respectively, aim to improve the connections of citizens living on small islands in Germany and facilitate their active participation in economic life. Starting from April 2020, as part of the German Climate Action Programme 2030, Germany will increase the air transport tax with a view to incentivise passengers to consider other, less polluting modes of transport. However, the objective of ensuring the connectivity of the islands remains. Therefore, in order to retain the travel tax exemption and tax reduction for flights to and from small islands, the budget of each scheme will be increased to maintain the effect of the general air tax increase. The Commission found that the budget increases are in line with EU State aid rules. In particular, the tax exemption for the islands’ residents is in line with the 2014 Aviation Guidelines, as it is non-discriminatory, will effectively benefit the residents and has a social character. The Commission also found that the increased budget for the tax reduction scheme for all other passengers flying to and from the islands is in line with the Guidelines on State aid for environmental protection and energy, since the reduction of the tax rate continues to pursue the legitimate goal of ensuring connectivity and does not undermine the general environmental objectives of the transport tax. More information will be available on the Commission’s competitionwebsite in the public case register under the case numbers SA.55903 and SA.55902 once any confidentiality issues have been resolved.