Easyjet crews and Revised taxes in Germany? [Archive]

rubik101

1st Aug 2007, 09:54

Anyone flying/working, wether you are contract or employed through an agency such as Brookfield or Rishworth, for easyJet, Ryanair, Veuling etc thinking that they can avoid paying tax in the country where they derive the majority of their income are just plain stupid or very badly advised.
It is the employees responsibility to contact the tax office in the area where they work. Don't ever get misled into thinking that the company you work for has any responsibility to pay the unpaid tax, they don't. Their resposibility extends only to NI contributions and PAYE if such a scheme exists. This ruling applies to all nationalities of the OECD, (effectively everywhere!) so if you are French working in Spain or Italian working in England or English working in Germany, the rules apply to you too.

Just because you become non-resident for tax purposes in one country does not excuse you from paying tax in the country where you work.
I would be very surprised if the authorities in Germany are only collecting the unpaid tax from the 1st of this year .They have the authority to collect tax for the previous seven years. They can also apply a penalty equal to 100% of the unpaid tax. Think Boris Becker and Michael Schumacher, both who narrowly avoided going to jail for just the same thing.

There is a very easy way to tell if you are liable for tax.
Ask yourself this simple question; am I happy for the tax authorities in the country where I work to know all about my financial arrangements?
If you answer NO, then you are breaking the law in that country.

My advice to you, if you are avoiding tax where you work, is to contact the tax office and come clean, before they apply the punitive fines when thay eventually find you.

orangedriver

1st Aug 2007, 10:09

The loophole is actually NOT closed.:}
For those of you working for ezy, read the email we got concerning this again, again and again. Then you will see it! Be a bit creative guys!;)
Not saying you should take advantage of this, but nothing really changed....

This is a way for ezy managenment to be able to tell the authorities in Germany that "We have informed ALL our crew, not our problem anymore".

rubik101

1st Aug 2007, 10:27

Orangedriver, this memo simply reinforces the point that it is the employees' responsibility to inform the local tax office of their existence. The company are happy to allow confusion to reign in that they can often avoid paying NI contributions in the host country if they declare that the employee is only temporarily assingned to a base away from home.
Whatever you have read here or been told in the bar, you MUST pay tax in the country where you derive the majority of your income. I am afraid that there are no exceptions. Just learn to accept this fact and join the rest of the working population who pay their taxes. You are not exempt because you are employed through a contractor, Brookfield or any other. The rules apply to you as an individual.
Google 'tax avoidance' and read all the advice you can find. No matter how hard you look, you will not find a scenario where you, I mean all of you, are exempt from paying Income Tax. The amount might vary but the principle does not.

suchiman

1st Aug 2007, 11:08

Kraut

1st Aug 2007, 22:30

Quote....... People should be taxed where they actually have the center of their daily life, where their family is, where their children go to school, where they use public support for daily problems etc...............Quote

That is correct. But it does make no sense than at all, if I pay my tax in Germany, but my social security to UK sources!
If, than social security and taxes should go to the german sources. And that is, what EZY is probably not willing to do, because they have to pay more for the employer part than in the UK!

I guess, the attrition rate will go up again!

rubik101

2nd Aug 2007, 08:44

However many ways you look at the tax situation, I would urge all of you to stop burying your heads in the sand and hoping this problem will go away, it won't.

As I said earlier;
There is a very easy way to tell if you are liable for tax.
Ask yourself this simple question; am I happy for the tax authorities in the country where I work to know all about my financial arrangements?
If you answer NO, then you are breaking the law in that country.

This rule applies wherever your company has its headquaters, wherever you come from, wherever your family live and wherever you work. It makes no difference. We are ALL obliged to pay tax, somewhere.

There are locally employed German crews, in Germany, who are under the false impression that they don't need to pay tax in Germany because easyjet and Ryanair have their headquaters outside Germany. Just how naive or blatantly stupid are these individuals? If you think you are being clever now, just wait until the fine hits you.

For German in the above paragraph, inseret your own nationality.

Once again, read the question above.

Bokkenrijder

2nd Aug 2007, 09:02

There are locally employed German crews, in Germany, who are under the false impression that they don't need to pay tax in Germany because easyjet and Ryanair have their headquaters outside Germany. So let's expand on that for a bit.

Do you think EZY will pay German tax over the profits it makes from the operation in Germany?

After all, the aircraft also spend the night in SXF/DTM and are therefore also 'resident' in Germany. Then there are things like the crew room and a ticket counter, all permanent things/objects which indicate EZY's presence in Germany.

Again, it's not so simple and straight forward as you say it is. :hmm:

rubik101

2nd Aug 2007, 09:11

Some of you seem to think that Double Taxation Treaties are a mechanism whereby you can, as an individual, avoid paying tax.

Double Taxation Treaties are conventions between two countries that aim to eliminate the double taxation of income or gains arising in one territory and paid to residents of another territory. They work by dividing the tax rights each country claims by its domestic laws over the same income and gains. Over 1,300 Double Taxation Conventions exist world-wide. The UK has one of the largest networks with more than 100.

Nowhere in these treaties is the principle that anyone is exempt from tax, simply that they will notr be taxed twice.

I have to tell you, yet again, that just because you are a pilot makes no difference to the fact that you have to pay tax. You can cite the case of mariners but even they pay tax, somehwere. The only difference is the amount you pay.
If you live in Berlin, fly out of SXF and work full time for ezy, then you are liable for tax in Germany. There is no way out of this fact. If you believe differently, be prepared for a shock and a big tax bill.

SR71

2nd Aug 2007, 09:38

Hey rubik101,

Do you work for the IR in your spare time?

:ok:

rubik101

2nd Aug 2007, 10:02

SR71 and others, I know how the system works because some years ago I too thought I was being so very clever by avoiding paying tax in just the circumstances described.

I lived in one country, worked in another, paid in a third, offshore bank and emplyed by a company based in a fourth. After lengthy negotiations with the tax authorities, I am still paying them the tax I owe them.

Far easier to pay as you earn, believe me.

Just face the fact that you cannot avoid death and taxes. No-one is exempt, no-one.

OPEN DES

2nd Aug 2007, 10:57

Some thoughts.

1. I have the impression that EZY knew about this from the beginning of this year or even before. They precisely timed the email from last week to ensure the crewing level during the summer peak. (3 month notice period)

2. As mentioned before this is a liability thing from easyJet to show the authorities that they HAVE informed their crew.

3. easyJet has got the German local contracts ready on the shelves and is trying to make things as complicated as possible to then offer us THE solution: i.e. a local contract. Sign it, or we will report you to your local tax-authority.

Pessimistic, perhaps.

I have joined a German base this spring and STILL they offered me to do the so-called S690 without informing me about any tax-liabilities in Germany.
I still have some thinking-time untill my 183 days in Germany expire.

For those in the know:
The new regulations state that German will fully exempt you from taxing provided you pay full UK tax. Is there a way for non UK residents to pay full UK tax? Without claiming tax back in the the yearly return. I would rather deal with one tax authority alone and Pay-As-You-Earn in the UK.

Regards

rubik101

2nd Aug 2007, 12:21

OpenDes, there is very little leeway allowed in choosing where to pay your tax. If you are English, working in Berlin (I guess) and being paid in euros to a bank in Germany, or even elsewhere in the world, you are obliged to pay taxes in the country where you 'derive the majority of your income'.

If you have been assessed as non-resident by the UK taxman then you should contact the local Finanzamt in Berlin and arrange to fill in a tax return there. Most, if not all, Germans employ a Tax accountant, who can work on a percentage or a fixed fee. They will work on your behalf to reduce your liability as much as is possible and in Germany, that can amount to quite a hefty refund each year.

You can claim some refund against your travel to work, your clothing, a room in your home as an office, all the equipment needed there such as fax, printer, computer, laptop, PDA etc. You can claim for things such as sunglasses, gloves, winter hat, all sorts of things. If you have a home in UK you will be allowed an allowance to maintain and visit that. However, you will still pay around 25% of your income in tax.

Talk to a tax accountant, (steurberater, in the phone book) and take the advice they give you. They will most certainly not advise you to stick your head even further in the sand and hope it will all go away. It won't.

Kraut

2nd Aug 2007, 12:46

You can claim some refund against your travel to work, your clothing, a room in your home as an office, all the equipment needed there such as fax, printer, computer, laptop, PDA etc. You can claim for things such as sunglasses, gloves, winter hat, all sorts of things. If you have a home in UK you will be allowed an allowance to maintain and visit that. However, you will still pay around 25% of your income in tax.

Because EZY informed to late, all pilots lost probably the ability to claim the above for at least 7 month, as probably most did not keep any bills to prove it to the Finanzamt.

For DTM/SXF tax infos, there are enough german pilots with experience of tax advisors, better than looking into the phonebook.
Experience in aviation tax issues, is what counts.

Saabdriver

2nd Aug 2007, 14:48

"If you believe differently, be prepared for a shock and a big tax bill."
:\
Hi rubik
See you your point. As of 2007, yes they will definetely enforce this, and people will be up for a rude awakening if they think different.
As far as going back to as far as 2004 (opening of the mainland bases) is concerned, no sweat !!
People had been in contact with their Finanzamt and the official tax return showed a zero balance with the german IR-services. As said before, it is just as of this year that the hole was plugged.
As Rubik and the others correctly said: The taxman will always win; even if he´s wrong (i.e. shoot first and then ask questions)
As far as German taxes are concerned, at least the tax rates are just about equal to the UK. People in other countries are even worse off. Germany/Switzerland for example. Pilots that used to fly for Germanwings/LH used to pay their taxes in Switzerland (domicile). Some of them as little as 10pc. Now they went up by factor 3 .... That´s what I call getting fu'*&%/&% !!! (So, yes .. it could be worse)
Btw, the change of this german tax clause was discussed in the Swiss government in October 2006. So, the UK and definetely easy have been knowing about this at least since 01/2007.
Did easy care: NO; Do they care now: NO. That´s why they sent a couple of gofers yesterday to the meeting in SXF. They didn´t have a clue and were just send to take the heat. Where was the "real management" (propably out on the golf course blowing their fuel saving bonus) ??
Anyways, guess we need to give it a couple of days, then look at the situation carefully, get a descent tax consultant and take it from there. The last thing we need now is everybody calling its Finanzamt individually as the the whole thing will perpetuate itself.
Cheerio

vee-en-ee

2nd Aug 2007, 15:33

Rubik obviously speaks from experience and is right in the main, however there are two issues here - the changed tax situation, and the lack of information given to staff by easyJet.

Firstly as Saabdriver says, the Finanzampt acknowledged the loophole and issued zero returns until now... but from 1 Jan 07, unknown to staff, we have been operating under a changed tax scheme. I fear screaming about it will achieve very little. So we are now into a tax mitigation situation, and each person will have to look at the best way of legally reducing his/her tax bill from 01 Jan. It is not straight forward in many cases and will need good professional advice to optimise the situation in my opinion.

Regarding easyJet deliberately withholding information from staff, it is at best immoral, possibly illegal. I feel that advice should be taken as to whether they had any legal obligation to inform staff of the changed circumstance which they obviously knew about. Indeed they encouraged staff to use the S690 scheme this year without any warnings. Any legal types out there wish to give informed comment on this point?

The reality is that there are many people who are now facing large bills and can't see how to pay them. It's not just the pilots who arguably may have more disposable income!:uhoh:

Breaking_Clouds

2nd Aug 2007, 16:14

Any info on were to find that changed law?

Saabdriver

2nd Aug 2007, 17:41

It´s all about Easy Crews ..... What´s happening to our friends at hahn and Bremen to whom this law should also apply (or?).
Did MOL find a way out of this one ???

Bokkenrijder

2nd Aug 2007, 17:48

I doubt it.

MOL is a lot of things, however he's is not a liar when it comes to admitting that he does not care much for his passengers or his employees.

That in sharp contrast to easyJet, who's spin doctors spew out orange bullsh!t on an almost daily basis about establishing a "career airline."

Saabdriver

2nd Aug 2007, 18:39

Yeah ..... and then they call it a "truly great place to work"

Unfortunately there are a bunch of ignorant people working for the orange liars (namely 82 percent :D !!!) that are believing what the bull**** merchants are saying.

Maybe they should do another Pulse survey now ... they might get 2 percent instead ....:ok:

Agaricus bisporus

2nd Aug 2007, 19:19

EU tax laws are perfectly simple and understandable, even for pilots...

If you live and work in the EU then you must pay tax - somewhere in the EU. This may be in your country of residence, or country of employment. One or the other, not neither, not both.

If you are naive enough to imagine that by being paid in £ ex UK whilst working in Germany you can bamboozle the tax authorities that you work in Germany so don't need to pay UK tax, and then tell the Germans that you are a UK employee so don't have to pat German tax then you're stacking up a whole load of trouble. Upon your return home when the UK tax office asks you "where have you been for the last x years, and where have you been paying tax?" they will want receipts - proof - that tax was paid elsewhere. If you can't give that they'll typically send a bill for the tax outstanding (pretty grim if you've spent it over the last few years) and then add a punitive charge of often the same again. Else you can go to court, get a Criminal record (ID card implications) and get fined even more.

D'oh!

CAT III DUAL

3rd Aug 2007, 06:49

With all respect: Why do you blame the company for offering the S690 to the employees ?
Everybody knew that this is a legal tax alleviation (!) only and that the final tax liability is up to the individual.

The S690 is a deal between yourself and the IR.
The company only does the paperwork.
You pay less tax initially because you seem to spend only part of your work
in the UK. So the IR is so generous and asks for less tax initially, giving you
a "interest-free" credit initially.

Everybody knows, that there is a "final bill" (tax-declaration) to be done in each year. Or in other words: That is not my final liability!

Only because Germany didn´t want to tax the so far untaxed part of the income NOBODY could assume forever that this would be written in stone!
To be honest, you HAD to expect that this great opportunity would end one day and if you were 5cents clever, you would have kept the tax return for each previous year until the German authorities answered "No, don´t want anything" after your German tax declaration.
Taking the cash all, spending it for different things and now, as you have to pay tax as (almost) everybody else on this planet you are disappointed by the company ? :=
If you all were so naive to think that this would work (legally) forever, your fault!:oh:

hunterboy

3rd Aug 2007, 07:15

Seems as though taxation in the EU isn't as simple as it first appears. I know pilots living in France, Spain and Italy that pay minimal taxes quite legally. One or two have been investigated by the Special Compliance unit of HMRC with no cases to answer, and their prospective countries seem happy enough as the spend less than the 183 days in the country.

rubik101

3rd Aug 2007, 08:25

Hunterboy, don't cloud the issue here. If you really do spend 183 local midnights outside the country, then you might be eligible for some relief. Anyone in the position of EZY or RYR etc most certainly will not qualify for such relief. Time spent flying to another country does not count, only local midnights.

Once again, the issue really is very simple. I have written it before but will repeat it for those of you who skim these threads. Bear in mind that this question is composed by HMRC, not me.

Ask yourself this simple question; am I happy for the tax authorities in the country where I work to know all about my financial arrangements?
If you answer NO, then you are breaking the law in that country.

Simple enough, isn't it?

Denti

3rd Aug 2007, 10:37

Here is what Net Jets supposively does. Pilots have British contract because the main headquarters(marketing, sales, PR) is in London. Non British resident pilots do not pay taxes in U.K. except for 5% cpt. 9% fo. for national insurance. Non British resident pilots then pay 25% non resident tax in Portugal (because that is were the operations center is). Your own tax authority may then also add some tax on top of that. That depends on the country.
Has anybody heard of this before? Sound familiar?
Just asking here because I know that there are many Germans in Net Jets.

The NetJets case is different as far as i know. Since your fully taxed in Portugal the germans cannot get any income tax on your pay (double taxation treaty). However your pay from Netjets is gonna taken into account for any other income you might get additionally, like stock market income, house/appartment rents etc to put you in the right tax bracket. So of course you have to do the taxation forms (Steuererklärung) and since it is a bit more complicated than normal taxation you surely need a pretty good Steuerberater who routinely works with cross-border taxation issues.

Saabdriver

3rd Aug 2007, 13:04

Ok guys, before we are all carried away ...

It is NOT, repeat NOT about the Germans changing their tax laws. It was a nice goody in the past, but things unfortunately sometimes change.

It´s a fact and we just have to live with it.
What people are complaining here is company communication.

So, AGAIN, I have no problem with the fact that I have to pay tax somewhere. I also haven´t done a UK return, so the money is still to come and I can fullfill my tax obligation for 2007.

Why we are complaining about easy you ask ....

As an employer they have the obligation to inform its employees about such drastic changes. They have known this since the beginning of the year and left everybody in the dark.
If this would happen at RYR, you wouldn´t expect it to be any different as everybody knows that RYR doesn´t give a rats ass about its people.

Lala land on the other hand tells everybody how great the place is, with the people being the biggest asset, bla bla bla.
There, YES I do expect that some information is passed on to its people.

There are other airlines facing the same changes, and their management has indeed informed its people and have even agreed on a special tax rate for their operation.

Question remains, why easy has informed its people at all. There will be more to come, e.g. increase in NI charges by moving to the German system, followed by local contracts. They, of course, will be a lot ****tier as the current ones, so at the end of the day we will be looking at the underpaid AB drivers who will eventually have a better pay deal then we do

Read my lips guys, it ain´t over yet ...........

international hog driver

3rd Aug 2007, 18:53

When I incepted this thread I never thought that it would receive as many views or replies as it has. Which goes to show that there was clearly the big elephant roaming the room with most of us trying to ignore it.

To those that it effects then, good luck deciding which way to jump!:E

Lastly Saabdriver, I would not worry about the AB package, Hunold has been the master of divide and conquer, having AB, DBA, LTU and GMX all working for the same parent and all on differing contracts, some represented and others not, the writing is on the wall.:hmm:

As more 737s and the future 787s arrive they will be operated by the lowest bidder, in the very same manner airlines like QF ransom off their regional flying to the lowest bidder among wholly owned daughter companies.:{

On top of that the FR & 4U contracts with dedicated days off allow you to at least plan some days off in advance where the AB guys are regularly positioning all over Germany by air and ground just to cover crew “vacancies”. :yuk:

:ok::ok::E

Bengerman

3rd Aug 2007, 20:23

However you do it.......pay your taxes!!

Ameliorate the effect as much as is reasonable, then join the rest of the civilised world and PAY YOUR TAXES!

When we see airline executives lining their own pockets at the expense of the workforce we get pretty uptight about it, well you freeloaders are doing exactly the same thing! Just because it is called tax,, instead of share options, performance related bonus or whatever doesn't make it right for fat cat management, and it is not right for you!

GET YOUR HAND IN YOUR POCKET AND PAY YOUR CONTRIBUTION!

AeroAccountant

3rd Aug 2007, 22:22

My take on this is the following:

It is a change in personal tax legislation in Germany which was obviously done in order to close a loophole that many crews, including easyJet crews, were able to take advantage of. Taking advantage of this loophole was perfectly legal and you guys seemed to have got away with paying very little tax for a long time - Well Done!!!!

I don't have much knowledge of easyJet but do believe that you guys have ultra high expectations if you think that they should be advising you on taxes - that sort of thing wouldn't happen in the vast majority of companies unless they were regularly moving people earning $1m+ around the world.

Most companies based in the UK wouldn't know anything that was happening in German personal tax legislation (in fact having spoken to a couple of my colleagues who specialise in German personal tax don't know about it (most governments don't like telling people about tax changes unless they are beneficial!)). Not sure how eJ would have found out about it but I do know they have spent lots of money looking at their own tax position across Europe in the last few months so it could have come out of that.

At the end of the day people have to pay tax unless they can afford to spend stupid amounts of money with the people that I work for, and take the risk of annoying the Authorities. If you thought that what you had would last then you were simply be niave. But nevermind - you now get the chance of claiming lots of spurious tax deductions in Germany and somehow getting away with it (which is how things happen there). I seriously advise talking to a German aviation specialist to work out what you can and can't claim - you never know, it may even save you money!

Saabdriver

4th Aug 2007, 12:26

Well Bengerman
You, as well, are missing the point. We have to pay taxes as of this year and that´s a fact. You can try to avoid that, but at the end of the day the tax man will always win.
I have accepted that fact and will do what I have to do.
Management at lala land is another thing. THEY HAVE KNOWN THAT FOR A LONG LONG TIME. Some people like a former GM has actually gotten out in due time wiith his parachute.
Anyways, this was only the first step. The big one is still to come......
In about a month or 2, they will drop the local contracts on us (which of course they haven´t even considered, bla bla bla). There you will find a pay reduction of about 10pc, or so followed by a net increase of NI (compared to the UK) and a tax rate that is as well higher than in the UK.
My guess is, we will be looking at a pay cut of about 25pc in addition to the normal UK tax rate.
If you look at the pay then, we will be on the same level as Achims knights (ONLY advantage being the fixed days off). Plus you will be loosing on certain "tax reduced" elements like share options, etc. as then they will be fully taxable according local law.
So, just pay the German tax for this year and when the big one will hit us get your parachute ready or, if you enjoy orange slavery, go for it.
My 5 cents ............ give it a few weeks, and then we shall see if I was right or wrong ...:D

international hog driver

4th Aug 2007, 21:44

My 5 cents ............ give it a few weeks, and then we shall see if I was right or wrong ...

Absolutly 100% correct Saaby!

I just got in from dinner with a few of the Berlin based easy' crew. I got the whole nine yards about the 5 puppets, the "voice" at the meeting etc etc.:D

I dont know if legal action is worth it as from the show of hands at the table the amount of CV rishworths and direct have and will recieve in the next few days will go a long way to fill all the AB slots in India and elsewhere!:ok:

There wont be anyone left to sign local contracts!:E

Roll on the 1% strike I say:}

Bokkenrijder

5th Aug 2007, 04:37

My point exactly Int Hog Driver!

I'm not gonna waste any more time to try to explain to people like Bengerman that we have not been cheating tax and that many of us have no problem to pay taxes. It was a nice loophole that now has been closed. I'm gonna spend more time and energy into finding a new job!

The major problem is lack trust in EZY in the way they have probably kept their mouth shut for 7 months to prevent the bases from emptying during the busy (and lucrative!) summer season. EZY can obviously not be trusted, not in the past as events have shown and probably not in the future.

Most folks in the UK let jealousy (a tax loophole) cloud their vision. I just say the following: good luck with your 0,5% p.a. pay increase and DON'T think that something like this will not happen to you. And also, don't forget to pack a toothbrush for those nightstops in DTM and SXF. :p

Saabdriver

5th Aug 2007, 07:30

Well, hope the UK jockeys don't have to do too many nightstops over here ......

Otherwise they will be considered for habitual abode and have to pay taxes here ....hahaha:ok:

Hans Modrow

5th Aug 2007, 11:13

if the german contracts will be similar to the spain ones ,
with the german tax,good night!!!
I'll wait untill I don't have to pay the bond any more and then... :ouch:
ciao
hm

Saabdriver

5th Aug 2007, 11:33

Well Hans, it certainly won´t be any better than the spanish or UK ones .. they will propably be a lot worth and they´ll try to justify it with the lower RPI and the lower cost of living, etc, etc .......

But it´s for those folks that can´t afford to leave right now (bond or other obligations) that we have to stand up and fight for.

And who knows, maybe one day the real management will crawl out of their hide-outs and show up to take the stand ....:yuk:

ZBMAN

5th Aug 2007, 15:49

I'm totally with you guys. We have the same problem in ORY. And we are already bracing for a fight.

fly_on_the_wall

5th Aug 2007, 17:27

Saabdriver - "But it´s for those folks that can´t afford to leave right now (bond or other obligations) that we have to stand up and fight for."

As one of those who can't afford to leave at the moment, I hope that the rest of us can pull together to show more of a sense of responsibility than what our company has shown for us, and help each other out of this quagmire! Even those who leave will find that it may come back to bite them later and it would pay off to find out a solution up front, now, than later alone.

:ugh:

CAT III DUAL

5th Aug 2007, 20:06

I am personally not sure about the companys wish to switch to local contracts.
The social costs in Germany are far higher than in the UK (with superior benefits of course)
and presently easyJ itself is not affected by the new tax rule.
The employee pays some more tax than an equivalent pilot in the UK. So what?
It´s not their problem, so why should they change it ? :hmm:
Won´t happen, my guess.

Kraut

5th Aug 2007, 20:48

Not so sure about that!
If I have to pay German taxes, why should I pay for a british social security system furtheron which is not as efficient as the german one(but more expensive, agreed)
At least for the pilots staying longer in Germany, on the long run, it will have more advantages.
Of course, EZY has to pay a higher amount to the german social security.
That is why they are probably not in a hurry at all.

But if so, they will try to bring, what they probably call "market competitive salaries". Interesting times ahead!

rubik101

6th Aug 2007, 17:00

I've been off the planet for a few days. It seems to me that all of you who thought the non-payment of tax in the past was a loophole are mistaken. You were obliged to pay taxes the moment you set foot in Berlin/Wherever. It was your responsibility to contact the local authorities and begin paying tax as soon as your first pay check arrived. If you are only being asked to pay from Jan. 1st 2007 then consider yourselves very lucky. Even more lucky if you have been there a year or two or maybe even more. As for your German colleagues who have also been benefiting from this situation, if they are exempt all their unpaid taxes from the time they joined EZY I will be most surprised!

Kraut

6th Aug 2007, 17:40

As for your German colleagues who have also been benefiting from this situation, if they are exempt all their unpaid taxes from the time they joined EZY I will be most surprised!

I am surprised how much some of you at the island know about the german pilots, how we are paying our taxes!!??
Did you ever here about the "Progressionsvorbehalt" in combination with the double tax agreement?
However, that there is a change now, to pay MORE tax, I agree!

DJS

6th Aug 2007, 18:00

Taking a step backwards for a moment, conflict of international law can sometimes legally bring about odd results and provide an unexpected beneficial outcome in some quarters.

Others have already commented upon this and potential moral issues.

Whilst I certainly do not seek to moralise perhaps it is inevitable for governments to consider any perceived “loophole” and for it eventually to be “plugged”.

If so then it would appear that steps have been taken in this regard to close further at least part of the European Tax Net.

Is this simply another sign of the times leaning towards a revenue driven European or even Global tax Policy?

Or is it just another step in a UK clampdown or even planned “fallout” from HMRC intervention and prior exchange of information between UK and other European member states over recent years with Aircrew being a part of a much bigger picture?

How and why? -May not help those for whom this change is regarded as either an unwelcome or unexpected imposition, but my guess is that it is most likely here to stay.

Having conducted a brief search on internet it looks as though the important German tax change referred to has been heralded in by the Amendment Tax Act 2007 in Germany?
Or does anyone else have other information on subject?
This appears to me to represent and confirm the new German interpretation of international tax law via the Double Taxation Agreement on the German side. Concerning amongst other aspects, prior exemption of foreign-source income (i.e. salary) being disallowed as an override on the prior take of matters- if it were to result in double non taxation.

Assume that this is the local German tax issue you are all are concerned about within this thread, which will no doubt be considered by many to be an important watershed primarily concerning the element of UK salary not taxed in UK for a Non Resident relating to overseas duties.

Clearly the evolving international tax picture continues to remain fluid in many respects and such changes were also talked about for the French tax interpretation as well, although that appears to have stalled pending further clarification and confirmation from the French which I understand is currently still awaited.

Is it simply a matter of “watch this space” for other countries?

Surely the best approach is to take regular professional tax advice within all relevant countries in order to ensure that all individual requirements are met.

No change for UK Non Resident concerning basis of UK tax position in respect of UK duties.

However the overall tax position should always be fully considered and settled in accordance with all relevant criteria and if necessary filing in more than one jurisdiction as appropriate.

Only time will tell exactly how the German authorities seek to apply these matters in future on a day to day basis.

Are you prepared to simply wait and see? Who is current group Tax Manager at company Head Office?

Have the company offered any update themselves?

Will they listen and offer consolidated advice or help after a unified approach by employees?

Whilst taxation is a vital factor it is of course only part of the overall equation but in the end no doubt personal decisions will be made and many may consider voting with their feet but the phrase of “beware jumping from the frying pan into fire” springs to mind so do consider all aspects and ensure that you have full facts before taking any next step.

So can anyone recommend a good German Tax Adviser?
Hope that this is of some help.
DJS

CAT III DUAL

6th Aug 2007, 21:13

Does anybody know about the implications for employees -NOT-
ordinarily resident in Germany for more than 183 days, e.g. the Belgium or
Dutch pilots who have their life in their respective country normally and who
are just commuting to work in Germany for their blocks of 5 days

a) if they have rented a room or apartment in Germany or
b) staying in a bed-n-breakfast claiming to commute each day ?

Are they obliged to pay tax in Germany ?

Thought if you are here for less than 183 days you are fine ?
Any comments appreciated.:bored:

OPEN DES

6th Aug 2007, 21:26

CAT3DUAL

We're still trying to find that out.

As you said: '183 days per year without any interruptions. Excluding short breaks. (e.g. weekends)'

We are not sure whether our 4 days off or a 2 week holiday for example are counted as an 'interruption' by the German taxman. If so, this would solve the problem for the commuters.

Regards

sarah737

6th Aug 2007, 23:03

If you don't want the remaining loopholes to be closed, you better don't discuss this on a public forum!:oh:

CAT III DUAL

7th Aug 2007, 06:17

If you don't want the remaining loopholes to be closed, you better don't discuss this on a public forum

Well, as somebody mentioned before: We don´t try to find a solution
to hide from the authorities or avoiding to pay tax by trying
"not to be there officially", but use the legal framework to its max.

The rules have changed, fine, but if there is some 183day threshold to cross
and my/their residence is somewhere in another (third) country it is really
interesting to know if this affects your final tax liability in Germany.

Kraut

7th Aug 2007, 14:45

Maybe some guys are now diverting to AIR BERLIN?

http://www.vcockpit.de/presseaktuell.php?artikel=167

In english /roughly)
TOPICAL PRESS RELEASES collaboration between Air Berlin and union cockpit agrees before the background of the progressive concentration processes in the German aviation industry Air Berlin and the union cockpit have ascertained the necessity of a collaboration as a basic condition for the success of the newly developing enterprise structure together. Therefore, both sides have themselves after intensive preliminary talks on the end of a reimbursement and

rubik101

7th Aug 2007, 17:00

Bokkenrijder

7th Aug 2007, 17:10

For someone in Cambs/Herts you take a mighty interest in the (individual!) tax situation of your German colleagues. I hope you attack the current (lousy) pay offer with the same vigor!

Again, don't let jealousy cloud your (socialist) vision... :rolleyes:

p.s. I hope you don't claim tax relief for your BALPA membership because you might be regarded as a tax cheater by your own standards! Just pay up! Or are you perhaps not a member? ;)

rubik101

7th Aug 2007, 17:21

bokkenrijder, if you read the whole thread you will see that I write here because I have intimate experience of the situation. Some years ago I foolishly tried the same tactic. When I eventually returned to the UK just prior to my planned retirement, I was presented with a self assesment tax form and a letter from my local tax Inspector.
There is no way to fill it in without admitting that you had incomoe abroad and no way to avoid telling them that you have paid no tax on that income.
Result after long and painful negotiatoins; retirement postponed to work full-time to pay the unpaid tax, the penalty (50%extra) and keep my body and soul in one piece, 16 year old car, living in a caravan, no house, no holidays, no extras!
I am not jealous of those in the same position as I was then, I am simply trying to prepare you for the inevitable outcome.
I will finally retire next year to a shed on the beach in Thailand so I am past caring.

Bokkenrijder

7th Aug 2007, 17:26

OK fair enough, point taken, but let's be honest, every situation/DTT/country is different.

The old system/loophole was accepted by both the Uk and the German tax offices. That loophole has now been closed. OK, again, fair enough so we move on and pay our taxes, or move away.

Case closed?

AeroAccountant

7th Aug 2007, 21:25

sarah737, and the rest of you who are clinging to vague hope that keeping your head down and praying will allow things to continue as they were; it won't help! This never was a so called 'loophole'. The general rule has been in place for many years now. That rule is that if you live and work in one country, you will not be taxed in another. The treaties enacted by the OECD did not ever envisage people avoiding tax by simply moving to another country, being classed as non-resident for tax purposes, getting a job and not paying tax. We are all obliged to pay tax if we live and work in the OECD and you are not exempt just because easyjet is based in the UK or RYR in Ireland and you work in Germany etc.
There are no loopholes, there never were any.
Face it and pay up like the rest of us do!

Rubik, just to let you know that yes, this is the basic rule. However the OECD model treaties also didn't envisage a situation where an airline from one country could employ people who are based in another and fly routes that do not touch the country of head office. Basically the OECD model treaty is out of date.

What does this mean with respect to domestic legislation. Basically if you are German then you have nothing to worry about when it comes to the past; the law change was made because the Germans accepted that there was this loophole and so shut it down with this change in law. Jan 07 onwards you will of course be paying tax on anything that the UK doesn't tax due to your non-residency status.

If you are from the UK then it will depend; if you are not resident in the UK but in Germany then you MAY be OK; however if you keep a house in the UK, have your family here, send money back here etc then you might have an issue if you haven't been taxing all of your salary here. But if you left the UK and don't intend to come back then you probably won't. If you fall somewhere in between then you should probably take some sort of advice just to make sure that your luck doesn't run out like Rubik's. (And if it does then definitely take some advice from a Tax Investigation Specialist as 50% penalties are virtually unheard of - they can normally be argued down to 10-20% in situations like this - and can be nil if you declare it before the Taxman finds out.)

Finally please don't fall into the trap of thinking that your personal tax treatment should follow that of the company you for; as mentioned above the OECD model treaties really don't cover the modern European aviation environment at the moment and it can take years for these to be rewritten, negotiated and signed.

rubik101

8th Aug 2007, 13:09

Perhaps the UK citizens amongst you might like to take a look at this website.
http://www.inlandrevenuetaxadvice.co.uk/google2/

It may not be exactly right for you if you are employed by EZY or RYR but it does give you some insight into the way HMRC works when dealing with individuals and small businesses.

You might also like to take a look here and note bullet point 6.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/SelfAssessmentYourTaxReturn/DG_4017116

Most important is this page. It explains for instance, that RYR is a UK based company for all tax purposes, however unpleasant that fact might be!
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10026136
Read this and the related pages carefully to see if you are taxable. Chances are, you are, were, and forever will be!
I hope this helps.
p.s. maybe we should open a Tax info thread?

Joe_Bar

8th Aug 2007, 13:13

I think it's time to request PPRuNe for a EZY private forum.
Maybe we can take over the lively Air Nippon or Southwest Cabin crew forum.
Cheers
JB

Bad Robot

8th Aug 2007, 15:14

By clicking on to these links in Rubiks post above, are you not now effectively showing a RED FLAG? As they are HMRC Websites and surely they will be "Observing" those that are making "Enquiries" ? :hmm:

rubik101

8th Aug 2007, 19:17

Robot, you're paranoid! Are you under the impression that HMCR can trace you merely because you take a look at their website? You watch too many spy movies I think.
Knowledge is power. Log on and find out all you need to know. Ignorance is never bliss. Ignorance of the law is not an excuse for not following it.

CAT III DUAL

8th Aug 2007, 20:58

Basically if you are German then you have nothing to worry about when it comes to the past;

Is there any reference where I could see/prove somebody from the local
german tax office that the untaxed part of UK income is NOT to be taxed
in Germany for the PAST ? Guess there are several years of tax declarations
due and it might be interesting to be able to proof that possibly, if asked.

Where is that written, that they are not allowed to touch it ?
Pls don´t answer "read the agreement", I did so but couldn´t really figure out.
Any comments (copy´n´paste?) appreciated.

DJS

9th Aug 2007, 10:06

Sorry to shatter any illusions but HMRC will most likely already be well aware of any German domestic changes in interpretation of tax treatment of DTA or indeed generally when it comes to Aircrew.

I have up to date experience of the UK tax position for Aircrew and have successfully defended many from HMRC enquiry.

Furthermore I fully anticipate that UK HMRC were instrumental in driving this through and that they wish to see such changes on a Global basis (i.e. when possible rule out any instances of Double Non Taxation).

It would seem to be a matter of HMRC thinking that “if we can no longer tax you then someone else should”

No doubt the debate will continue about fairness and some might even seek to moralise but recalling a comment from a senior HMRC enquiry officer some years back now- “since when has tax been fair”.

Outrageous perhaps, but any new rules need consideration and action.

Changing tack slightly but do stay with this-did any of you see how easily the UK HMRC recently gained orders for the banks to disclose details of offshore account holders to them?

Again HMRC will be aware of individuals on overseas basings and those with valid Non Residence claims and up to date UK tax affairs have nothing to worry about from UK tax authorities.

Will Germany and other host countries ask for information under the exchange of information articles of the DTA with UK and in turn will HMRC then approach the company for instance in respect of listings of those based within Germany?
Interesting to wonder how hard a company might try to legally defend such action or simply comply at the outset?

A much more straightforward link can be made via any local host country payrolls of course.

Again not a problem if your overall tax obligations are kept in order on a timely basis and given that any new rules are followed.

Best tip is to look to the future and adapt accordingly with up to date professional advice regarding the latest position within your host country as well as keeping your UK tax affairs in order.
Again hope that this is of some help.
DJS

DJS

9th Aug 2007, 10:44

Cat III Dual

Does this help?

http://elink.allenovery.com/getFile.aspx?ItemType=Bulletin&id=8a0a0ae5-68f3-4e23-a5e5-15ac73a45d6f

looks on my first reading that it can be retrospective for all years where assessment notice has not become final ,in some instances but do now see PS below.

Can only agree with others and suggest again that its best to take up to date advice from a tax professional within Germany or any other relevant host country.

Cheers
DJS

PS having looked at this again then with "income not previously taxed because of receipt by a non resident of other country ( ie UK)" then it would not appear to be retrospective after all in those circumstances.

Clear as mud perhaps but it underlines the complex nature of the potential minefield and need for expert interpretation of exactly how and when this will be applied on German side.
Apologies for any confusion created by attempting to post this quickly in first instance today.
DJS