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Aer Lingus stays silent on reports of tax demands over layoff scheme

An Aer Lingus spokesman last night declined to comment on reports that the Revenue Commissioners had sent tax demands to some staff who availed of a so-called 2008 'leave and return' scheme that saw them awarded lucrative redundancy payments before they were rehired by the airline on lesser terms.

The spokesman said Aer Lingus is still awaiting a decision from the Department of Enterprise, Trade and Innovation regarding the proposed treatment of the redundancies.

The department must formally indicate whether or not it classes the 715 layoffs in question as genuine.

The Revenue Commissioners takes its ultimate cue from the department, which has dragged its feet for more than two years -- first under Tanaiste Mary Coughlan and now under Batt O'Keeffe -- in making its decision regarding the Aer Lingus layoffs.


However, in the meantime the Revenue Commissioners has sent tax demands on the payments to some of the 715 staff who availed of the leave and return scheme. The scheme was made available to ground staff at the airline who received payments of between €30,000 and €140,000.

Aer Lingus could qualify for a €5m refund from the department in relation to the total of almost 1,100 staff made redundant in 2008, if it is decided the airline's scheme qualifies for a rebate.

That would represent 60pc of the overall cost to the airline of the redundancies. Employees who received the favourable tax treatment in effect generated a loss of anywhere between €25m and €40m for the state coffers, it has been estimated.

For employees who lose their jobs, only their statutory redundancy payments are normally tax-free. Any ex-gratia payments can be liable for tax.

Irish Independent