Taxing times in France (and the UK)

opinion

by Mike Stones

February 17, 2025

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.

FRENCH TAX ‘WORSE THAN UK AIRLINE PASSENGER DUTY’: BBGA

The new French tax on commercial business aircraft departures, effective from March 1st, will have a worse impact on its domestic aviation than the proposed British Airline Passenger Duty (APD), according to the British Business and General Aviation Association (BBGA).

“The French tax is not the same at UK APD, however both are additional costs for users of commercial business aviation,” Lindsey Oliver, director general, BBGA tells CJI. “Although the French government claims it will generate €1 billion new tax revenue it will instead discourage foreign direct investment as highlighted in the recent Oxford Economics report.”

The recent report, jointly commissioned by European Business Aviation Association and General Aviation Manufacturers Association (GAMA), argues business aviation is vital for European connectivity, medical transport, and attracting foreign investment. The report warns of limited environmental benefits associated with constraining the use of business aviation services.

“Notably, our analysis shows that Europe would become less attractive as a destination for FDI [foreign direct investment] with an estimated reduction of up to €120 billion by 2030,” wrote the reports’ authors. Lower FDI would, in turn, cause a reduction in employment supported by foreign-controlled entities in the EU27 by up to 104,000. On the other hand, the estimated reduction in CO2 would be equivalent of 0.03% of total CO2 emissions in the EU27 in 2030.”

So, how likely are cash-strapped governments on both sides of the English Channel to ratchet up the rate of tax and other restrictions on business aviation in the years ahead?

It’s a redundant question for Oliver, at BBGA: “They already have – indirectly via UK boarder force charges, CAA charges, use of historic slots, cost of training and more.”