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O'Leary says Ireland is 'penal' amid move to cut workers' tax

Ryanair moves more planes to Maltese certificate, cutting the tax paid here

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Ryanair group chief executive Michael O’Leary. Photo: Bloomberg

Ryanair group chief executive Michael O’Leary. Photo: Bloomberg

Bloomberg

Ryanair group chief executive Michael O’Leary. Photo: Bloomberg

Michael O'Leary, the group chief executive of Ryanair, has described Ireland as a "very penal country" regarding personal taxes as the company registers more of its fleet abroad for tax purposes.

Last year, Ryanair acquired Malta Air, a Maltese startup airline. Shortly after, the company unveiled plans to switch 50 Ryanair aircraft based in France, Italy and Germany from an Irish airline operator certificate (AOC) to a Maltese AOC, allowing pilots and crews manning those planes to pay income tax in their home countries.

The employees would have previously paid income tax in Ireland due to Section 127B, a tax rule introduced in 2011. Section 127B means that any income derived from employment on board a plane operated by an Irish company is chargeable for tax in Ireland, whether the individual is a resident of the State or not.

Last year, figures obtained from Ryanair by TheStory.ie suggested that €35m a year in tax revenue could be affected by a change, with an estimate of €5m more for other airlines involved.

Ryanair's latest results for the third quarter reveal plans to grow the number of planes registered in Malta to 120 by the summer. Malta Air has also taken over Ryanair's French, German, Italian and Maltese bases. It has previously been reported that Ryanair would pay corporate tax on the profits of Maltese-registered planes in Malta, as opposed to Ireland.

During a call with analysts, O'Leary said moving some of the fleet's AOCs to Malta or Poland helped improve cost efficiencies. "The fact that we can move to local taxation, and why the unions wanted local taxation in most of the countries, is because personal tax rates are lower there than they are in Ireland," he said.

"Ireland has this reputation as being a corporate tax haven, but it's a very penal country from a personal tax point of view."

O'Leary also laid the blame for Ryanair's move with the Government, claiming during the call that "less taxes paid here in Ireland" was an "inevitable by-product" of the refusal to alter the tax rules.

He also confirmed that Buzz, Ryanair's operation in Poland, had taken over its bases in central European countries, in a move that would allow pilots and crews based there to pay taxes in their home countries.

Buzz is to have 50 aircraft registered by summer 2020, mostly scheduled to fly for Ryanair.

Last week, Ryanair reported a third-quarter profit of €88m, up from a €66m loss this time last year.

Sunday Indo Business