Denmark drops departure tax

The Danish government has decided to drop its special tax of €10 (Lm4.34) levied on all departing passengers, except for those in transit.

According to Jyllands-Posten, Denmark's leading daily, the Danish treasury will lose an estimated €70 million in revenue annually. However the paper said the move was expected to attract more tourists and airline routes to Denmark.

Low-fare airline company Ryanair, which is also trying to penetrate the Maltese market, recently stated that it would not expand its traffic out of Danish airports as long as the passenger tax remained in force. Previously, the British-based airline Sterling used the tax as an argument for utilising the nearby Malmo airport in Sweden instead of Copenhagen airport.

Until recently only Denmark, Malta and the UK taxed passengers on their departure.

Answering a parliamentary question by British MEP Chris Davies, Laszlo Kovacs, Commissioner for Taxation, said that EU member states still enjoy the freedom to maintain or introduce certain indirect taxes provided that they respect the conditions set out in community legislation.

"Few member states apply taxes on airplane tickets, such as Great Britain, Denmark and Malta. But Denmark is reflecting on the abolition of this in the future. However, France is considering the introduction of such a tax...in order to finance the official development aid."

On the other hand, Commissioner Kovacs made it clear that the Commission supports the introduction of certain aviation-related taxes such as taxes on fuel which currently is still untaxed.

Mr Kovacs said that aviation has historically enjoyed wide fiscal privileges originally intended to support the emerging industry.

"Since the 1990s the Commission has started assessing the tax exemptions related to aviation and believes that over time all means of transport have to be treated on an equal footing," he told MEPs.

Following pressure from various Maltese quarters and MEPs, the European Commission recently started looking into whether the departure tax imposed by the government on passengers leaving Malta is in conformity with EU law.

European Transport Commissioner Jacques Barrot said that the Commission had asked the government for an explanation.

Currently all passengers leaving Malta have to pay a Lm20 departure tax.