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Aviation Companies Complain About Carbon Tax


Seven of Europe's largest aviation companies -- Airbus, British Airways, Virgin Atlantic, Lufthansa, Air France, Air Berlin and Iberia -- have written to the EU's political leaders warning of the implications of bringing global airlines into the emissions trading scheme (ETS). Under the proposed scheme, airlines would receive tradable allowances covering a certain level of CO2 emissions from their annual flights. At the end of each year, operators would have to surrender allowances equal to their actual emissions over the period. Taxand Germany explores the Airplane Tax issue and actions aviation companies should expect to take.

China, Russia and the United States are amongst those countries that have registered complaints about the EU's plans to introduce the ETS, with each considering measures to exclude their own fleets from participation. Europe's aviation companies have confirmed that they 'fully expect the lists of suspensions, cancellations and punitive actions to grow as other important markets continue to oppose the ETS', with a looming trade war over the ETS something Europe 'can ill-afford in the current economic climate'. Worryingly for them, China has already suspended a EUR9.2 billion order for Airbus planes, threatening 1,000 jobs at Airbus and a further 1,000 in related businesses.

Taxand's Take

With China having recently suspended an order of airbus aircraft, and other aviation companies announcing they may follow suit, multinationals in this and associated industries should keep informed of latest developments as the implications of further action would be far reaching and therefore impact tax planning.

Your Taxand contact for furhter queries is:
Ulrich Siegemund
T. +49 69 27229 16364

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