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BUDGET

New flight tax pushing passengers to airports abroad

This year’s new flight tax has brought in far less money than expected, a media report said Monday. Frugal Germans may be using airports across the country’s borders to save money.

New flight tax pushing passengers to airports abroad
Photo: DPA

According to an unnamed Finance Ministry source, revenue from the tax from the beginning of January to the end of February garnered some €59.1 million, business daily Handelsblatt reported.

But Finance Minister Wolfgang Schäuble had previously said he expected the tax, part of an austerity plan passed last autumn, to add €1 billion per year to government coffers – or some €83.3 million each month, well below current levels.

Airlines told Handelsblatt they doubted the tax would be successful, because many passengers seem to be turning to airports just across German borders.

Since January 1, airline tickets have been more expensive in Germany thanks to the tax, which adds some €8 to short-haul flights, €25 for mid-length trips and €45 on long-haul routes.

The Finance Ministry said in a report released Monday that the flagging flight tax situation could improve once the summer travel season begins. An official assessment of the tax is scheduled for June 30.

Meanwhile revenues in other areas have shown a significant improvement, with an increase of some 9.7 percent in February compared to last year, the ministry reported.

Last December low-cost Irish airline Ryanair said it would make further cuts to its services in Germany due to the new levy. Their plans included reducing capacity in the German capital by 56 percent, scrapping flights to four cities from the Berlin-Schönefeld airport from mid-2011.

Overall capacity in Germany is expected to fall by three million passengers per year and could lead to the elimination of 3,000 jobs, the carrier said.

The Local/DPA/ka

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CROSS-BORDER WORKERS

Germany and France extend Covid tax breaks for cross-border workers

Germany and France have agreed to extend the relaxation of tax rules for cross-border workers until the end of the year.

Cross-border workers commute by car but they can for now continue to work at home
Cross-border workers usually have to commute but can for now continue to work at home.. Photo: Fabrice Coffrini / AFP

The agreements between France and the governments of Belgium, Luxembourg, Germany, Switzerland and Italy avoids double taxation issues for anyone travelling across the French border to or from those countries in order to work.

During the pandemic, tax rules were eased to allow French cross-border employees, like their counterparts in Belgium, Luxembourg, Germany, Switzerland and Italy, to work from home without having to change their tax status.

The deals, which were established at the beginning of the health crisis in March 2020, were due to end on September 30th – and would have plunged cross-border workers still working from home because of the health crisis into renewed uncertainty over their taxes.

The latest extension of these agreements means there’s no confusion over where a cross-border worker pays their taxes until December 31st – for example cross-border workers who work in Geneva but live in France, who normally pay their taxes and social security contributions in Switzerland. 

Under normal circumstances, anyone living in France who works in Switzerland can spend no more than 25 percent of their time working from home. If they exceed this time limit, they would have to pay these tax charges tin France rather than in Switzerland, which would be much higher.

The agreements between France and Belgium, Luxembourg, Germany and Switzerland “provide that days worked at home because of the recommendations and health instructions related to the Covid-19 pandemic may … be considered as days worked in the state where [workers] usually carry out their activity and therefore remain taxable,” according to the statement from the French Employment Ministry.

In the case of Luxembourg, days worked from home because of the health crisis are not counted in usual the 29 day limit.

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