Ryanair had warned Ireland it would leave if tax laws weren’t amended

Some crew members operating out of European bases are obliged to pay marginal tax rates of over 65% because of a legal requirement for them to pay tax in Ireland

Michael O'Leary said last week that Ryanair's investment in Malta Air was an investment in Malta
Michael O'Leary said last week that Ryanair's investment in Malta Air was an investment in Malta

The double taxation of Ryanair crew members based outside of Ireland is one of the reasons for the Irish airline giant moving some of its operations out of the country, submissions to the Irish government by the airline show.

Last week, Ryanair announced that it had purchased a Maltese Air Operating Certificate (AOC), onto which it will be transferring Ryanair aircraft based in Malta, with plans for planes based in France, Germany and Italy to gradually be transferred onto the Maltese AOC. At least 50 of the Ryanair’s aircraft are expected to be transferred to the Maltese subsidiary.

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, 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.

Speaking at a press conference marking the acquisition of Malta Air, Ryanair CEO Michael O’Leary said the investment in the new airline represented an investment in Malta.

He described the negotiations that led up to the agreement as “the toughest and most difficult” negotiations he was a part of in the last 13 years, adding that the group would be investing up to $1 billion in Malta through the venture.

The new airline will be taking on the 62 routes Ryanair currently operates to and from Malta and will be looking to grow its network beyond that, O’Leary said.  

READ MORE: Ryanair setting up fully-fledged Malta subsidiary

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