Ryanair, Aer Lingus face losing €16m EU tax case

Joe Brennan

Ryanair and Aer Lingus face the risk of a €16 million tax bill after an adviser to the EU's top court said they should be liable to repay state aid linked to Ireland's now-suspended air travel tax.

The EU Court of Justice’s advocate general Paolo Mengozzi’s non-binding opinion on the case, delivered on Tuesday, may guide the court’s final decision on the matter. The ECJ usually follows the recommendations of the advocate general, but not always.

The opinion is the latest twist in a long-standing battle sparked by the Government’s introduction of a now-defunct travel tax in 2009, which levied a charge of €2 per passenger charge on flights of up to 300 kilometres and €10 a passenger on longer flights.

The European Commission had ordered in 2012 that the Government collect millions of euro for passengers carried by the two Irish airlines between 2009 and 2011, when Ireland moved to a flat €3 charge.

Following a complaint by Ryanair, the EU found that the lower rate between 2009 and 2011 constituted illegal state aid, as it favoured airlines whose business was mainly over shorter trips.

The two airlines appealed this ruling in separate cases taken to the EU’s General Court, which upheld their claims.

However, the Commission pleaded in a further appeal this year to the EU Court of Justice that its original finding should be retained and the carriers must pay up.

The ECJ advocate general has now said that the EU General Court should re-examine the case, but ultimately rule that the aid be repaid. Aer Lingus would have to pay the State €4 million and Ryanair would have to hand over €12 million under this event.

“This is an advisory opinion ahead of the judgement to be given by the Court of Justice itself, and does not prejudge the outcome of the case,” Aer Lingus said in response to questions. “That judgment is expected before the end of this year.”

Ryanair refused to comment on the advocate general’s opinion.

(Additional reporting: Bloomberg.)