German tax evasion investigation into agency pilots now involves Ryanair staff

28th April 2017

Regular readers of our blog will notice that we’ve spoken about Ryanair a few times before. However German tax authorities are now investigating social insurance and tax evasion by Ryanair pilots and the recruitment agencies that place them, and have opened an investigation into the role played by internal Ryanair staff.

Approval from within?

Authorities who were investigating the finances of over 100 agency pilots who flew for the budget airline carrier, were allegedly told by the recruitment agencies that the model used by the pilots was approved by Ryanair. Investigators have now opened a case regarding four senior Ryanair staff named by the employment agencies in questions.

Under the model being investigated, agency pilots were required to become directors in Irish shelf companies administered by three separate Irish accountancy firms. These shelf companies had up to 20 pilots as directors, the recruitment agencies in question charged Ryanair for the pilots’ services, and subsequently paid the pilots through the Irish based shelf companies.

Hans Peter Gandner, the leading prosecutor told The Sunday Times: “A recruitment agent expressed to us that he had been instructed by Ryanair to use contracts based on a fixed contract sample that had already been used in undertakings between Ryanair and another recruitment agency. It was further expressed that Ryanair had ‘suggested’ three certain accounting companies.”

Concealing relationships

Strangely, in a response to the reported investigation, Ryanair said it fully complied with EU and Irish employment and tax law and required all of its pilots and crew to be fully tax compliant. The company suggested that it was not under investigation by German authorities and instead would assist the prosecutor with “a small number of contractor pilots who may have calculated their social insurance or tax incorrectly.”

However, in a UK court case it emerged the German investigators allege the pilots’ companies “mainly serve to conceal an employment relationship with Ryanair”.

It’s becoming ever more difficult for individuals, even those with ‘advice’ from employers and accounting firms to avoid paying tax, and with harsher penalties and a growing sense of international collaboration when it comes to tax evasion, meaning there is nowhere for evaders to hide. If you’re at all unsure about your status, or that of the contractors you’re placing in unfamiliar regions, then ensure you partner with a specialist before it’s too late.

We’ll likely be following this situation closely, so keep an eye out for future pieces on Ryanair and its tax status.

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