Brussels, 04/01/2016 (Agence Europe) - Airline tickets are subject to VAT, even if their purchasers did not use them as they were not present during boarding, therefore making the tickets non-refundable.
This emerges from a judgment returned on Wednesday 23 December of last year by the Court of Justice of the EU, which had been approached by the French Council of State (joined cases C-250/14 and C289/14), to which a dispute had been brought between the tax authorities and the airline Air France-KLM and its subsidiary Brit Air. From 1999 onwards, the two airlines stopped paying VAT to the State on tickets which were not used by their passengers and not refunded to them (in the case of Brit Air, the amount subject to VAT was an annual fixed compensation corresponding to 2% of its turnover paid to it by Air France, which was responsible for the sales of tickets for the lines operated as a franchise by Brit Air). The French court asked the Court of Justice whether unused travel tickets can be subject to VAT.
The Court replied in the affirmative. It explained that the price of the ticket aims to provide payment for a service (the air travel) and in return, the passenger is given the right to benefit from the execution of this service, irrespective of whether or not he or she exercises this right. The VAT is therefore payable from the moment the airline, by selling the ticket, puts the passenger in a position to benefit from this service and it therefore becomes payable as soon as the price of the fare is received. In this framework, VAT also applies to the fixed amount paid by Air France to Brit Air for tickets issued and expired, the judges agreeing with the French Treasury that the money retained by Brit Air constitutes a consideration for transport services which are taxable, even if not taken advantage of, rather than compensation for any damages. (Original version in French by Francesco Gariazzo)