Estimated revenues of VAT and fuel tax on aviation

International aviation is exempt from VAT, both on their inputs (e.g. on fuel or aircraft) and on their revenues (e.g. on tickets). In the EU, aviation fuel is also exempt from the minimum fuel excise tariffs.

This report calculates the potential revenues of VAT on tickets and fuel tax on jet fuel. If VAT were to be levied on tickets while other aviation taxes were simultaneously abolished, this would yield revenues in the order of EUR 7 billion. Excise duty on jet fuel would raise revenues in the order of EUR 20 billion.

These figures do not take into account the impact of the cost increases on demand for aviation into account. Since higher costs will reduce demand, the estimates can be considered an upper bound.

The report was commissioned by Transport and Environment.

Estimated revenues of VAT and fuel tax on aviation

Authors CE

Jasper Faber
Marisa Korteland

Delft, July 2013