In Germany, a carrier is, in general, value added tax (VAT) liable along the domestic part of the flight route. However, it is possible for the carrier to apply for VAT remission according to the VAT Act. If the carrier is a German entity, the remission applies without further requirements other than an invoice without VAT. In contrast, if the carrier is a foreign entity, the tax relief must be mutual (ie, the state of the registered office of the foreign carrier must grant tax relief to German carriers as well).
Air carriers that grant free or discounted flights to employees provide a monetary benefit that is subject to wage tax. The tax basis for these staff flights is the usual final price reduced by the regular discount granted at the place of issue. The supreme tax authorities recently issued new averages for air mileage for 2016 to 2018. The averages apply if no restrictions exist in the reservation status.
The Federal Fiscal Court ruled on the taxation of pilots resident in Germany working for an Austrian carrier on board aircraft that are operated internationally. The court had to decide whether, and if so in what proportion, the salary of a pilot living in Germany must be taxed under the double taxation agreement between Austria and Germany based on either the exemption method or the imputation method.
Commercial passenger flights departing from German airports have been taxed since the implementation of the Air Traffic Tax Act in 2011. The tax is set according to the flight destination and the number of passengers transported. According to the legislature, the act is supposed to create incentives for environmentally friendly behaviour. The Federal Fiscal Court recently confirmed that the tax is in line with the Constitution and EU law.