EU Considering Applying VAT on Flights, Travel Agencies

The European Commission on Thursday opened a public consultation on whether to apply a value-added tax on travel agencies and passenger transport, including air travel.

In an accompanying note to the consultation, the commission said the zero rates for air and maritime transport applied currently, as well as reduced rates for trains and buses, “translates into very low VAT revenue,” around 1.3% of the EU’s total VAT collection.

It said VAT rates don’t take environmental impact into consideration, creating “possible distortions on routes served by competing services across transport modes.”

To correct those distortions, the commission said ...