‘Change pilots’ tax anomaly or we’ll leave’
Ryanair issued warning to Donohoe
RYANAIR told the Department of Finance it might have to move its operations out of Ireland because of an anomaly that sees pilots and air crew taxed in two countries.
The warning was included in a submission to Finance Minister Paschal Donohue who was told the low-fares airline would have to consider ‘the migration of Ryanair’s operations’ out of Dublin.
Ryanair’s concerns hinge on the double taxation of pilots and aircrew, who are forced to pay income tax and USC in Ireland and social insurance in their country of residence.
Mr Donohoe was warned however, that rectifying the problem could blow a €40m hole in his plans for Budget 2019.
He opted to do nothing in last year’s Budget while Ryanair have gone to court in an attempt to have the problem solved legally. The aircrew get hit on the double because, unlike Ireland where income tax rates are high, many EU states have much higher rates of social insurance, the equivalent of PRSI.
In Hungary, Italy, Poland, and Lithuania, non-Irish based crew have ended up with marginal rates of tax of over 65%. A Department of Finance submission said Ryanair, along with Cityjet and Norwegian Air, were affected by the issue and faced a ‘significant commercial disadvantage’. It said Ryanair – due to its size – was worst affected with difficulties in recruiting pilots.
The submission said: ‘Ryanair has stated that in the absence of a viable solution… it will be forced to consider alternative operating structures in order to sustain existing operations and the employment of non-Irish resident aircrew. This would include the migration of Ryanair’s operations from Ireland.’
It would have meant corporate tax from that part of Ryanair’s business being lost to Ireland.
However, the cost of rectifying the double taxation anomaly was also very steep, according to the internal memorandum. Figures provided by Ryanair suggested that €35m a year in tax revenue could be affected by a change with an estimate of €5m more for the other airlines.
The submission suggested that Mr Donohoe could ‘do nothing for the present’ and would reassess during 2019.
Ryanair did not respond to a request for comment.
High cost of rectifying double taxation