Ryanair’s flight to Malta will take off millions in Irish tax

This news had Irish journalists hopping mad. Brian Carey wrote on The Times (UK): “Ireland might have been overtaken in the race to the bottom. At the very least, another EU member is sitting on its shoulder. The Ryanair chief executive Michael O’Leary, tired of banging his head against a wall of officialdom on Merrion Street, last week announced plans to shift control of a large chunk of the airline’s fleet from Ireland to Malta. Potentially tens of millions of tax revenue will be in tow.”

TheStory.ie, an Irish non-profit freedom of information new source, reported back in February this year that Ryanair had told the Irish Department of Finance it would have to move its operations out of Ireland because of a requirement under Irish law for airline staff employed by Irish registered airlines to pay taxes in Ireland. This creates a situation here employees were required to pay higher Irish tax rates, despite not working in the country, while also having to pay social security in their own country.

“The aircrew are getting hit on the double because unlike Ireland, where income tax rates are high, many EU states have much higher rates of social insurance,” reads the article. “In four countries, Hungary, Italy, Poland, and Lithuania, non-Irish based crew have ending up with marginal rates of tax of over 65%.”

Ryanair had told the Irish government that “in the absence of a viable solution”, it would be “forced to consider alternative operating structures to sustain existing operations and the employment of non-Irish resident aircrew”, including the migration of its operations from Ireland. It had even initiated legal action against Ireland in November last year seeking amendments to the law, according to the report.

The move will see aircrew operating aircraft based in France, Germany and Italy, and which have been transferred to the Maltese AOC, will be allowed to pay tax in their home countries. It will also mean that operational profits registered by Malta Air will be subject to Maltese corporate tax laws.

According to The Sunday Times (UK), the migration of the aircraft to Malta will mean a loss of €35 million in taxes for Ireland - more than half of the €50 million in income taxes generated by the company. Staff in Italy, where the airline holds a 28% market share, paid €7.5 million in taxes to the Irish exchequer in 2017, reported the paper.