French business aviation is hoping for a reprieve on the new tax. (Photocredit: StockCake).
Bon Vendredi – or Happy Friday. Except a better name in France may be Worried Friday – at least for business aviation. Last Friday was the day the French European Business Aircraft Association (EBAA) hoped it might have heard that France’s new tax on commercial business aviation departures had been ruled illegal.
It has appealed to the Constitutional Counsel – the highest authority in France – to nullify the nation’s new tax law, which could see a 300% hike to previous passenger taxes for business aircraft flights.
‘A disaster tax’
It’s “a disaster tax”, Paul Tiba, board member EBBA France told an online meeting on the subject last week. Equally scathing was Charles Aguettant, the association’s chairman. “We hope to have some discussion with them [the French government] to convince them that these taxes are ridiculous,” said Aguettant. “They are going to kill companies and not only French companies.”
It’s not difficult to understand what has unleashed their passion. From March 1st, France will apply new duties on all passenger-carrying commercial business aircraft carrying up to 19 people. While the tax will not apply to private flight departures, it will be incurred on both turboprop and jet charters. (Idiosyncratically, the French government classes piston aircraft as turboprops for the purposes of this legislation).
The rate of the new tax will vary depending on the distance travelled. Departures from France to domestic and European destinations on flights of up to 3,418 miles (5,500km) will be taxed at the rate of €420 (£350) per passenger on business aircraft powered by jet engines. Turboprop aircraft will incur about half that rate. Flights within France will be subject to an additional 10% Value Added Tax (VAT).
French fashion
On longer flights of more than 3,418 miles, there will be a charge per passenger of €2,100 (£1,750). Operators will be responsible for collecting the fees, which will be reviewed each year. In characteristically French fashion, all flight distances will be measured on the length of journey from Paris Charles De Gaulle Airport irrespective of the actual point of departure.
The motivation behind the new tax is, perhaps unsurprisingly, money, claims EBAA France. It is expected to yield additional revenue of up to €1bn (£0.833m) for the French government. “It’s definitely only a political decision and not an economic or any kind of physical [sustainability] decision. It’s purely political,” said Tiba. The revenue will go directly to French government coffers rather than be diverted to environmental schemes, it is understood.
Key questions remain. It is thought that fractional flights, cargo flights without passengers and helicopter sorties will not be subject to the tax. But that is not certain. Equally uncertain is whether the new tax will apply to business liners such as the ACJ TwoTwenty or the Boeing Business Jet carrying up to 19 passengers. The association is seeking urgent clarification on these and other related questions from the French government.
Insidious threat
Aside from the extra tax payable, there is another worryingly insidious threat, according to some. EBAA France fears the tax will damage not just the charter sector but also exert a de-multiplier impact throughout the country’s general aviation. Casualties could include business aircraft support services such as FBOs, fuel services and other business aviation suppliers.
Meanwhile, EBAA France awaits the results of its appeal to the Constitutional Counsel – which was hoped to come as early as last Friday. The challenge rests partly on the assertion that air travel is fundamentally the same whether passengers fly on a scheduled airline flight or a business aircraft. “There is no objective difference between Air France and a business flight which can justify the different [level of] tax,” said Nicholas Fischel, secretary, EBAA France.
Behind all the arguments, all the figures, the complexity (and apparent opaqueness and contradictions) of the new regulations lies a lingering fear. New tax regulations are seldom ditched at the last minute and when revised, rarely is their path downward.
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