EU Countries Consider 20-Year Tax Exemption for Jet Fuel, Document Reveals

By Kate Abnett

BRUSSELS – European Union member states are deliberating a potential 20-year postponement on the implementation of EU-wide taxes on polluting aviation fuels as they aim for progress on long-stalled tax reforms, according to a draft document reviewed by reporters.

The European Commission proposed a significant revision of energy tax regulations in 2021 to enhance their environmental sustainability, which includes the gradual imposition of taxes on fuels for flights within the 27-member bloc, currently exempt from EU-wide levies.

After failing to reach consensus on earlier proposals that would establish a minimum EU tax rate for jet fuel starting in 2028, countries are now contemplating a 20-year exemption for both aviation and maritime fuels, as indicated in the draft compromise.

The document states, "Given the insufficient availability of sustainable alternative fuel (SAF) in the market, taxing aviation fuels would likely lead to increased air ticket prices without promoting a transition from fossil fuels to SAF."

Only small aircraft with a maximum capacity of 19 seats and boats designated for private pleasure navigation would be subjected to minimum EU taxes before the end of the 20-year period. For other aircraft and vessels, nations may implement national taxes at their discretion, but they would not be mandated to do so.

Under the proposed compromise, EU countries would have the opportunity to reassess the application of EU minimum tax rates to aviation and maritime fuels after 15 years at the conclusion of the 20-year exemption.

Other fuels, including petrol for cars and electricity, already have minimum EU tax rates in place. This compromise was put forward by Hungary, which currently holds the EU’s rotating presidency and oversees negotiations among EU states until the year’s end. A representative from Hungary’s EU delegation did not immediately provide a comment.

EU diplomats plan to discuss the proposal later this month. Adjusting EU tax policy is notably challenging, as it necessitates unanimous consent from all member states—allowing any single government the power to obstruct the process.

Environmental advocates, who have consistently urged for the elimination of the tax exemption on jet fuel, argue that a 20-year delay contradicts the EU’s objective of achieving net zero emissions by 2050. Jo Dardenne, aviation director at the non-profit organization Transport & Environment, commented, "By the time this tax would become effective, the world is expected to have attained climate neutrality."