European Union Court of Justice – VAT taxation of unused local flight tickets

EUCJ has explained, that the issue by an airline company of tickets is subject to value added tax where the tickets have not been used by passengers and the latter are unable to obtain a refund for those tickets. The amount retained by the airline company is not intended to compensate for possible harm suffered by the company as a result of a passenger’s ‘no-show’, but constitutes remuneration, even where the passenger did not benefit from the transport.

In the event that a third party sells an airline company’s tickets on behalf of that company in the context of a franchise agreement and pays that company, in respect of tickets issued and no longer valid, a lump sum calculated as a percentage of the annual turnover from the corresponding flight routes, that sum constitutes a taxable amount as consideration for those tickets as there is a direct link between the performance of the services provided and the remuneration received in that regard.

Recent Posts

August 16, 2023

What to keep in mind when calculating payroll taxes in Lithuania?

Payroll taxes in Lithuania play a significant role in regulating the remuneration of employees. The Labor Code of the Republic of Lithuania provides guidelines for…

Continue reading
August 9, 2023


We kindly inform that on 28th June 2023, with resolution No. 504 the Government of the Republic of Lithuania changed resolution No. 526 “On the…

Continue reading
June 27, 2023

Processes of optimization and workflows

„In a rapidly changing environment of business and technology, the field of accounting could not lag behind the development. Companies which had server based accounting…

Continue reading