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US airlines fight ‘cash-grab’ ticket tax

American airlines have launched a legal bid to strike out a tax which adds up to €45 onto every transatlantic plane ticket leaving German soil.

US airlines fight 'cash-grab' ticket tax
Photo: DPA

Airline trade organisation Airlines for America (A4A), which includes companies like Delta, United and Continental, filed a complaint on Friday.

In a statement, the group called the tax “a short-sighted cash-grab that will do more harm to the German economy than any short-term benefit that the tax revenue may bring the country’s coffers.”

The challenge was filed at Hesse’s state fiscal court in Kassel, taking issue with the German Air Transport Tax which took effect last January and put airlines serving the US into the highest of three tax brackets.

Until recently A4A, whose members operate 90 percent of American passenger and cargo flights, accepted the tax under protest.

But in a statement released on Friday, it said the decision was taken to make a challenge after legal advice suggested the tax violated several long-standing international agreements, including the US-EU Open Skies Agreement.

A4A feel that passengers coming from the US to Germany already pay enough taxes, the statement said.

“Germany cannot arbitrarily close its budget gap on the backs of the U.S. airlines,” it said.

The organisation announced in the statement that they would be filing a detailed complaint with the German Fiscal Court within the next two months at the same time it urges a referral of the case to the German Federal Constitution Court.

The Local/jcw

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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