Flege pointed out that Germany still does not impose VAT on international flights, and the recently introduced aviation charges are too low to correct the distorted competitive environment. Flege called on politicians to create a level playing field, saying it was long overdue. “We want to see VAT exemption extended to include international train tickets,” he said. At the very least only the reduced rate of 7% VAT should be imposed, the same as for regional train tickets.
However, calculations made by the rail companies offering cross-border services show that it has still been possible in recent years to increase market share on certain routes. According to Deutsche Bahn, the Stuttgart – Paris TGV service now has a market share of 58%. Even on the Frankfurt – Paris route the railways have managed to increase market share to 28%. As Deutsche Bahn pointed out, this is particularly impressive when one considers that Frankfurt and Paris are the hubs of German-French aviation.
Thalys, which operates international rail services in Germany on routes from Cologne to Brussels and Paris, has also seen passenger numbers increase. Since December 2009 there has been a 10 percent increase across the whole Thalys network in new customers switching from the airlines, said Thalys spokeswoman Patricia Baars. Calculating VAT rates, which vary from country to country, has become an art in itself. “For the German section of the journey, 19% VAT is levied, in Belgium it is six percent and in France it is zero percent if there is competition from scheduled airlines on the same route.”
The Pro-Rail Alliance believes that trains are increasing their market share despite the unfavourable competitive conditions because journey times have become shorter and comfort levels have increased. “Customers also appreciate the railways’ green credentials,” added the Pro-Rail Alliance’s managing director Flege.
According to figures published in 2007 by the Federal Statistics Office in Germany, the number of rail customers affected by VAT on international rail tickets depends on where they live. It shows that Baden Württemberg has the largest number of international rail passengers (4.4 million) followed by Bavaria (2.6m) and North-Rhine Westphalia (2.1m).
