Tickets for international rail travel should be exempt from VAT across the European Union, and the tax advantages granted to aviation and passenger shipping should be abolished. The organisation Transport & Environment is also calling for a European rail industry strategy, support for the procurement of trains and the extension of the pilot programme for new international connections.
The European environmental organisation Transport & Environment – T&E has published a set of recommendations to strengthen the European Union’s plan for the development of high-speed rail transport.
The document analyses the own-initiative report prepared by the European Parliament following the European Commission’s presentation, in November 2025, of its plan to accelerate the development of high-speed trains in the EU.
T&E considers that the infrastructure provided for under the Trans-European Transport Network TEN-T is insufficient for the development of competitive rail links. Fiscal, industrial and commercial measures are also needed to enable the effective introduction of new and frequent train services between major European cities.
VAT-free international tickets
One of the main proposals is the introduction of a European VAT exemption for international train tickets.
The European Commission had already announced in 2021 that it would examine the possibility of abolishing VAT on international rail travel. According to T&E, however, the new plan for high-speed trains has not taken a concrete step in this direction, limiting itself to recommending that Member States create a level playing field between different modes of transport in terms of taxation.
The organisation is calling for the measure to be included in the forthcoming review of European VAT rules on tourism and travel.
T&E’s calculations indicate an annual budgetary cost of EUR 106-117 million for the VAT exemption on international passenger rail transport.
In contrast, the organisation argues that scrapping the tax breaks currently granted to aviation and passenger shipping could generate revenue in the order of billions of EUR.
Short flights should not be replaced by longer ones
T&E also warns about how the shift of passengers from air to rail might be achieved.
Setting a mandatory target for replacing short flights within the European Union may have the opposite effect to that intended if it is not linked to rules on airport expansion and slot allocation.
If the slots freed up by the elimination of some short flights are used for long-haul flights, total emissions may actually become higher than before.
The organisation is therefore calling for climate-related conditions to be incorporated into plans for airport expansion and into the rules governing slot allocation. The shift of passengers to rail should not be measured solely by the number of flights replaced, but by the actual reduction in emissions.
A European rail industry strategy
Another key issue is the availability of rolling stock.
New lines and corridors cannot automatically generate rail services if operators cannot source the necessary trains or if production lead times are too long.
T&E proposes the development of a European railway industrial strategy to accelerate the harmonisation of requirements, simplify national regulations and increase the industry’s production capacity.
The strategy should also help to increase the availability of second-hand trains, which can enable new services to be launched more quickly.
The organisation draws attention to competition from manufacturers outside the European Union, particularly those from China. The European rail market is still dominated by European companies, but the fragmentation of orders and national standards limits the industry’s production capacity and competitiveness.
T&E compares the situation to developments in the automotive industry, where Chinese manufacturers reached a 22 per cent share of the European market by 2024, before the EU responded by introducing tariffs.
More international trains before high-speed lines are completed
The construction of high-speed rail infrastructure can take decades, and citizens should not have to wait for all projects to be completed to benefit from new international connections, the organisation argues.
T&E proposes extending the European Commission’s programme for cross-border rail pilot projects until 2035.
The programme has helped launch long-distance routes such as Prague–Copenhagen and Naples–Berlin. However, other projects have been abandoned or have stalled, partly due to operators’ difficulties in purchasing the necessary rolling stock.
The extension of the programme should be accompanied by European financial guarantees for the purchase of trains. In this way, operators could launch new services before journey times become fully competitive with air travel.
T&E believes that this measure could help bring about a genuine trans-European rail network, rather than merely a collection of national infrastructure projects.
Rail transport included in electricity credit schemes
The document also proposes including rail transport in national credit schemes for the use of renewable electricity in transport.
The European Renewable Energy Directive requires Member States to develop systems whereby the use of electricity in transport contributes to achieving emission reduction targets.
According to T&E, most countries focus almost exclusively on road transport and leave rail outside these schemes.
The organisation is calling for the forthcoming revision of the directive to mandate the inclusion of rail transport, which could create a new source of funding for operators and for the development of electric services.
European corridors cannot function without national investment
T&E supports the allocation of European funds from the Connecting Europe Facility to the missing cross-border sections of the TEN-T network.
However, the success of these projects also depends on the coordinated modernisation of lines within each Member State. Otherwise, the new cross-border connections will lead to national sections suffering from bottlenecks and insufficient capacity.
The organisation calls for national and regional investment plans to be more closely aligned with the TEN-T corridor plans and with the priorities set at European level.
For countries such as Romania, this is one of the document’s most relevant observations: a modernised cross-border connection cannot deliver its intended benefits if trains then enter slow, congested or inadequately modernised national lines.
In T&E’s view, the European plan for high-speed trains must go beyond simply building lines. It must simultaneously address ticket prices, a lack of trains, market fragmentation and the bottlenecks that prevent the launch of international services.
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