(57) In particular, Ireland referred to the hypothetical scenario, provided in its letter dated 15 October 2009 to the Commission, of a flight from the United States which had a stopover in Shannon and then went on to Dublin. The text passage stated that ‘the flight is clearly US-Dublin, and the fact of the stopover shouldn't generate any ATT liability’. In describing a flight going in the opposite direction, the text stated that ‘for flights leaving the country with a stopover, the only aim of the exemption is to ensure that both legs of the journey don't have to be taxed separately’. According to Ireland, this underlined that the journey from Dublin to the United States was seen as a single journey and should thus only be subject to the ATT once, even if it involved several departures.
(58) Ireland declared that this was the reason why Section 55(1) of the Finance Act explicitly excludes ‘transfer’ and ‘transit’ passengers, as defined in that section, from the scope of the ATT.
(59) Considering the reference system envisaged by the Commission in the Opening Decision either as (i) a tax charged on every
departure
, or else (ii) a tax charged on every
journey
, which might involve several segments, Ireland suggested that the aim of the ATT was to tax each journey only once. According to Ireland, it would be more accurate to see the ATT as a tax on journeys rather than a tax on departures. Section 55(2) of the Finance Act refers to ‘departure’ as the trigger for the ATT. The definitions and sections of the Finance Act described in recitals 18 and 19 demonstrate, however, that the service which was taxed was the journey and that the real objective was to tax journeys, not departures.
4.4.
On the distinction between point to point airlines and others
(60) Ireland held that assessing whether the airline operators providing only point-to-point services and those providing connecting flights are in a comparable factual and legal situation in light of the objective assigned to the tax system of the Member State concerned can be only a secondary reason for rejecting the complaint. Ireland's primary submission is that the ATT aimed to tax journeys, not individual departures. As a result, the exemption for transfer and transit passengers merely reflects the fact that a single journey can be comprised of several ‘legs’. Ireland also pointed out that the ATT was not designed to favour or penalise any specific business model.
4.5.
On the nature and general scheme of the tax
(61) Finally Ireland stated that if the exemption for transfer and transit passengers conferred advantages on certain airlines, it could result directly from the basic and guiding principles of the Irish tax system such as the avoidance of double taxation or tax neutrality.
(62) Recalling the terms of its letter of 15 October 2009, Ireland explained that the exemption was intended to avoid over-application of the ATT. In particular, it was intended to avoid discrimination against passengers whose journey involved a stopover. Necessarily, this reference to discrimination involved comparing (a) passengers whose journey involved a stopover and (b) passengers who flew directly. As the aim was to treat both in the same way, this supports the conclusion that the aim of the ATT was to tax each journey only once.
(63) Ireland also invoked the need to avoid double taxation. Although this principle may not have been cited in Ireland's letter dated 15 October 2009, that letter invoked issues of equity and equal treatment which cause States to refrain from double taxation. Similarly, Ireland invoked the principle of tax neutrality.
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