Originally Posted by Dg800
Once again, this has nothing to do with contractors but only with employees. If you live in one country but have your income taxed at source in another country it may well be that you also have obligations to fulfill (such as reporting all your combined earnings) towards the country of residence. These obligations are your responsibility only, your employer will not do that for you, because you are not like a "normal" employee who works, lives and pays his taxes in one and the same country.
How about the double taxation agreement between Ireland and Italy? What does it say?
Are you, as a resident in Italy, obliged to pay income tax in Italy when you are employed by an Irish airline? Would the tax the company deducts at source and pays to Ireland be deducted and if the Italian tax level is higher, would you have to pay the difference to Italian authorities?
If you were based in Sweden, that would be the case, so how about Italy?
Rumours a few years ago said there was a loop-hole in the taxation agreement between Ireland and Italy. Appearently it said that if you:
-Were not an Italian national
-Were employed by a foreign carrier
-Based in Italy
You could choose to pay tax either in the country of the company, or in Italy.
As a Ryanair employee you had therefore the opportunity to pay your taxes in Ireland and not in Italy. But, as you were a resident of Italy and did not use any public resources funded by income tax in Ireland for the full year, you had an opportunity to have all tax payed to Ireland refunded at the end of there year. Hence, the income tax would drop to zero. If this was fully legal, I couldn't say, but it was ongoing on the Italian bases a few years back. The agreement was supposed to be changed a couple of years ago but I don't know what has happended...
Those that used above mentioned loop-hole might have "forgotten" to adapt to new regulations and would not have declared their income tha last couple of years which could lead to a nasty surprise...
Originally Posted by A and C
Dannyagilla and I have clashed a few times on this forum and I have to ask what he makes of the situation in Spain and pilots who are trying to pay rather than avoid taxes.
Over the last few weeks a number of pilots from the Northern part of Europe have been told that they have to register & Pay social tax in Spain were they are based. They have turned up at the Police station to register them selfs as resident but the Police won't stamp their tax forms because the Police don't consider them resident.
So now we have a situation were the pilots are trying to comply with the EU regulations regarding social tax but the National authority's are refusing to issue the paperwork to enable the tax to be paid.
Just to add to the confusion one country up north is refusing to let these people pay the social tax were they are really resident because the EU directive requires the tax to be paid in the country that the pilot is based in !
So now these guys can't pay the Social tax to any one.
You could not write this as fiction, it's just too stupid !
First, social tax is not the responsibility of the employee but of the company. Social taxes differ from income tax and the two should not necessarily be paid to the same country. And, according to the CEO of above mentioned company, all pilots are now to be employed and not self-employed. Thus, the requirement to comply with social security fees lies with the employer, whether it is NAS, PARC, Rishworth or any other company. The country of residence of the employer is not a social security issue either.
I agree the regulations were stressed through by thebureaucrats and the consequences of the regulations were most likely not analyzed enough.
Though, the need for these regulations are created by certain companies constant search to avoid competeing with local terms and regulation.
Now, these Nordic nationals based in Spain are by law probably not considered residents. Your place of residence is more or less globally defined as the place where you usually spend your free time and nightrest. The Nordic pilots based in Spain in above mentioned company spend their nights on duty in hotels all over the Nordic region, commute back to the Nordic countries on their days off and might on the odd occasion spend a night or so in Spain in between commuting and work. Therefore, they can't be considered residents of Spain.
This should, however, not be a problem since their employer are responsible for paying social security according to EU law.
The residency issue is only a matter of where you are liable to pay income tax. Normally you pay income tax to the country where you are employed. If employed in Holland, based in Spain and residing in Sweden you would probably be liable to pay income tax in Holland and Sweden.