Removing VAT-related distortions between transport modes: Exempt all cross-border passenger transport from VAT

Based on an analysis of competitive distortions and on discussions with representatives of the European Commission, Member States and other transport market stakeholders, CER proposes to change the VAT Directive so as to allow Member States to remove existing distortions between transport modes, notably between aviation and rail, by exempting all cross-border passenger transport from VAT, i.e. to apply zero output VAT together with the right to deduct input VAT, regardless of transport mode.