Ryanair, Brookfield and Tax

[south coast]

I know there is loads written about this and I dont work for Ryanair in any way, directly or via Brookfield.

I do however have a friend who works for Ryanair as a contractor with Brookfield and he tells me he is now going to have to start paying tax with PAYE.

Without getting into a mud slinging competition about FR, can someone please explain how or why a contractor should be forced to pay PAYE and if they are, does that mean they are then a full-time employee with Brookfield and are therefore entitled to benefits afforded to full time employees, ie. leave, paid sick time, social security employer contributions, a contract etc etc, basically, the things we all take for granted when in full time employment.


Thanks, changed Parc to Brookfield, apologies.

[BALLSOUT]

I think you mean Brookfield and not Parc.
As I understand it, the new contract has contractors tied to one of three accountants that take off 30% at source from their monthly pay in order to send this to the revenue. I assume this is to make people pay their taxes and reduce the exposure of the company becoming liable in the event of non payment.

[nosher]

Yep Think you mean Brookfield & just to clarify the deduction is 3% not 30%

[BALLSOUT]

3% is the accountants charge for his services, I understand they are also to take 30% off the top for the tax man. You then get:- 100% less 33%, i.e 67%.
You then sort out the ballance with the revenue at the end of the year!

[postman23]

Let me get this straight, not trying to throw mud around now but just interested; 3% of a pilot's pay flows into the contracter's pocket just for paying a big chunk of tax up front to the taxman, yet the employee is still to work out the fine math at year's end?

[BALLSOUT]

I imagine the accountant that you are paying 3% of your wages to will sort out the tax at the end of the year and make the adjustments then.

[WallyWumpus]

I cannot accuse the posters above of being wrong, but some of the language is perhaps a little misleading.

From the gross income made by the contractors (pilots) limited company, you deduct any normal and approved expenses incurred. From the balance you pay income tax at the appropriate rate for your earnings (basically PAYE). The difference between my way of putting it, and posts above, is that it is not a "blanket" 30% (or any other percentage), but is calculated on income as is the case for any other Irish tax payer.

Wally.

[BALLSOUT]

Wally, Thanks for the clarification, I understood it was something like that. It does make a big difference to just picking up 7 or 8000 euro's a month and sorting thing's out sometime in the future. It will also make a massive difference to some of the captains on 15000 euro's a month that aren't even paying any tax just now, once they have to switch to new contract.

[Sceptic99]

I think the deal is as follows.
Any of the four approved accountants charge 3% of fees or turnover for providing the service irrespective of the outcome. The tax liability is dependent on the pilots situation and on the accountants skillset. As you see from previous piostings I use Scanlon & Associates. They are light years ahead of the other firms and this is reflected in their popularity.:8

[BALLSOUT]

I have learned a new entrant will also be able to reclaim all training and associated costs before paying any tax.

[flyboy1818]

I have asked an accountant about this and I do not believe this is true, you may however be able to reclaim VAT!

[RAT 5]

Dutch pilots, of whom there are many at both EZ & FR can deduct all training costs against income tax. Thus they are tax free for quite a few years. If it's normal on the Continent why not else where?
A question: how can you be self employed and pay PAYE? That seems a contradiction. If someone is paying you net, rostering you as and when they wish, controlling all you do and say, and how, then how on earth can you be 'self-employed'? I know this has been discussed before, but now this madatory Irish solicitor set-up has been constructed it makes it even more smelly. You are self employed, paid via a UK agency, but you MUST club together with an Irish solicitor to form an Irish company, pay Irish taxes while you are based in Italy or anywhere else, and never visit Ireland and have no income there. This sounds like the most shackled, inhibited, self-empolyment scenario I've ever heard of.

[Hasdrubal]

There are three accountants, BRK have told them that they must charge 3%, there are alternatives for half this amount and pilots are getting paid and are still on the roster.

Its PAYE because the pilot is not self employed but instead is employed by an Irish Company, (all be it one that he owns himself)

Its been gone over a hundred times here that the scenario has been manufactured by FR & BRK to suit themselves. A chunk of full time pilots to cover the basics and then a few hundred contractors who can be taken off the roster at no cost to the airline when demand for flights is lower.

Its a good business model and if the pilots were free to use their own accountants would probably suit all those pilots flying for FR that do not live in Ireland and they could reduce their taxes with some decent tax advice.

However because BRK only care about BRK and not keeping their contractors happy. There see no incentive for them to help the pilots take home more pay.

Ironically they are missing a trick here. By allowing pilots to use more aggressive tax planning strategies they could keep the Irish tax office happy and at the same time have a happy bunch of contractors who are all taking home significantly more money that their full time employee colleagues.

[WallyWumpus]

FLYBOY1818,

As a joiner earlier this, and as someone who was forced to select 1 of the 3 accountants requested by BRK, I can tell you first hand that all type rating costs are being reclaimed as expenses against un-taxed income. What we cannot claim is previous training ATPL/CAA costs.

Wally.

[woofly31]

How much of the TR costs do you hope to get back? :ok:

[WallyWumpus]

I need to be careful in my use of language to ensure I do not mis-lead you here.

The tax rules allow us to do two things. Firstly, we reclaim the VAT payment, which means that part of the payment comes back to us and goes straight back into our pocket.

For the remainder (28ish K EUR), we are entitled to claim this back as an expense. This means, in simple terms, that the first 28k of our income is tax free. We have still paid this money out, but the rules mean we pay less tax on our initial income.

Wally.

[Hasdrubal]

Wally

I thought Type rating and training are specifically named as expenses that the Irish Revenue will not allow a company to claim.

I think it was an issue for Aer Lingus a few years back and I know that Aer Arrann also sent a query to the tax office in the last 18 months.

[Leo Hairy-Camel]

This sounds like the most shackled, inhibited, self-empolyment scenario I've ever heard of.
RAT 5, you're an imbecile. The arrangements in place with BRK and its partner associates provide for tax compliance across the EU, whilst enjoying the lowest corporate tax rate in any non-Dodgy European country. With apologies to Cyprus and Malta, but anywhere that attracts a disproportionate number of tattooed Russians isn't exactly stamping itself with credibility.

Dutch pilots, of whom there are many at both EZ & FR
Partial credit. What you meant to write was TOO many. Back to your hole, now. Next time you feel the need to squeak, be sure of your facts, there's a good lad.

Leo.

[PGA]

Partial credit. What you meant to write was TOO many. Back to your hole, now. Next time you feel the need to squeak, be sure of your facts, there's a good lad

Elaborate...

[The Real Slim Shady]

Now, now, Leo, you know very well that there is only 1 way to deal with any subject under the sun: the Dutch way. :ugh:

[James T. Kirk]

Brookfield list several accountancy firms but advise new guys to do their homework before selecting one. Has anyone here any advice on which one or ones do the best job.

I am just about to start the process of selecting one and any advice would be good.

Thanks and happy landings,

[WallyWumpus]

Hasdrubal,

I cannot, obviously, comment on the situation between other carriers and the Irish tax office, all I can tell you is what this years BRK mob are doing with the current crop of accountants.

If I were to pursue this to better understanding, I would be asking about Shamrock and Air A employment terms and structure. Are the pilots employed as contractors like us? Maybe the devil in the detail on this one?

Wally.

[Hasdrubal]

Leo, Leo, Leo,

The BRK solution is not a pan european solution. Its an Irish solution. If a dutch pilot pays 3% over to McNammara or one of the other accountants they will look after his Irish tax return only.

He still has to prepare and file a return in Holland which McNamara will conveniently point out that they are not in a position to do.

So the pilot will have to fork out more cash to someone in his home country to file a return.

BRK's motivation is not to look after the contractors. It started out as a reaction to getting their balls busted by the tax office and then they spotted a opportunity to raise even more money out of their pilots by charging them to do a tax return for them.

Think about it. If there are 900 FR contractors going through BRK, lets give them an average salary of €80k per annum. Even if BRK are only getting half of the 3% back from the accountants then it is worth €1.08million a year. That's an extra million euro in income from the pilots.

What a touch. You got to take your hat off to them. With the rest of the industry in the toilet and his paymasters facing tough times DD at BRK manages to screw the pilots by lowering their rates, then he screws them for at least another €1,200 by making them use a accountant buddy of his to sort out their taxes which takes him out of a hole with the taxman.

Take a bow Mr Dooney

[James T. Kirk]

It might be interesting to note that a director of a company has certain duties and responsibilities defined by the Companies Act. I can't talk about the other three but CXC will not even tell you who the other directors of your company are.

Take care, this could cost you more than it will ever save on tax.

[Fata Morgana 909]

Does anyone know the reason behind setting up this "three man" Ltd. company?, would have thought you could set up your own Ltd. company with much less headache trying to get to know all the "in and outs" regarding the liabilities you have towards the other people there all of a sudden.

[Raven1972]

You might want to talk to your accountant again..As a self employed person you can deduct the cost of all training and other legit expenses from your gross profit...then you pay tax on that figure...

[767200ER]

"SCAM"

hahaha, so its better to throw as much money as possible to the taxman then?

[pilotguy32]

I don't realy get this. Say that you're based in Spain for example.

You have to pay tax on Ireland, and then in Spain to? If you do deductions in your company in Ireland, for example the rating, a headset and so on, will this deduction follow you to spain or will you have to pay more tax in spain instead?

How do you contractors out in europe do, where do you pay taxes and what does the percentage end up in with all the deductions you are allowed to do? :)

[d105]

Unfortunately for the new guys these new contracts are severely restricting their financial freedom. Fortunately for me I was able to sign a copy of the "old" BRK contracts, which still had the provision that the pilot is either self-employed or works through a limited company. The reason why the self-employed option was taken out of the contracts is because BRK can not make money there, nor can the Irish Tax Regulator. I know a few guys who have their BRK salary as a whole deposited into their bank account. Before, we're talking 2 years ago now, the only requirement for BRK was a letter of your accountant confirming you are indeed self-employed. Needless to say a lot of these letters have been forged.

[pint'alfempty]

Discussing tax liability on a public forum is not the wisest of ideas.

[ZAV]

See that Ryanair is being forced to close its base in Marseille as the French government are persuing them for social costs and taxes for the pilots

MARSEILLE, France (AFP) - Low-cost airline Ryanair (Dublin: RY4.IR (http://uk.finance.yahoo.com/q?s=RY4.IR) - news (http://uk.finance.yahoo.com/q/h?s=RY4.IR)) said Wednesday it will close its base in Marseille because French prosecutors refused to drop a case against it for hiring workers on Irish contracts.

it will happen in other countries soon,,,,, still O` Leary will have taken his massive bonus and will probably be sipping a cocktail in the Caribbean by then, leave it to the pilots to sort out their affairs with the EU govts

Sad :(

[captjns]

ZAV says leave it to the pilots to sort out their affairs with the EU govts.

I would think that these lads sort the expert advice of both legal and financial counsel to avoid any potential pit falls. If not... oh well... such as life. Can't blame BKR... and can't blame FR for decisions that employees, and contractors alike make.

[captplaystation]

I think it is probably generally accepted that the European "tax-net" is tightening & that the "good old days" are at an end for most people. And of course following the EasyJet debacle this was always going to be the next target, why else do you think FR never opened a BVA base, just TOO visible on AF's doorstep.

In the beginning most contractors made a conscious choice to go down this route for "tax optimisation" ;) regretably it degenerated into a situation whereby FR benefitted (& the employee lost out) by making no social contributions & it rapidly became the only show in the FR town with no permanent contracts on offer.
The arguments by various "legacy carriers" that FR enjoyed an unfair advantage by "social dumping" is entirely valid, and one that the pilot were happy to go along with as long as it was of benefit to them in the short term.

Like everything else in the FR"I'm all right jack fcuk the rest of you" business /employment model, this has come back to bite those who profited by it.
For now the pilots are paying the price & it will be the turn of FR one day too, as more Govt's catch on to the untapped revenue source existing in their backyard. Of course FR will expect the employee to bear the brunt of the additional contribution burden, or will try moving to more "cooperative" tax regimes, but, Europe is only so big, and you "can run but you can't hide" will eventually come to pass.
Still, "good while it lasted" has to be the "glass-half-full" motto for both contractors & Ryanair alike I guess.

[zerotohero]

I have an old BRK contract,

Good and bad points and they have been made many times

I love the fact I am in control of it, I sit down with my accountant once a year, same guy I have been with for 10 years now as self employed and I give him my earnings, my expenses, we fill in the standard self employed UK tax form sent it off and wait for the bill, its great.

Bad points are days off sick and swaps for attending things are like ripping money right out my pocket, 2 days off for a wedding is €600-€1200 out my earnings plus the money for the event, no retirement fund building up, and no job security, o yea and everyone on here thinks I (BRK guys) are the Devils spawn and we deserve to go straight to Hell! :mad:

On the whole though I am more than happy with my contract, but I don't plan 30 years in Flying, I hope to be done in 2-3 year on the line and maybe pull a part time flying gig on a king air or something, 10-15 hours a month would suit, the thought of 900 a year watching the DME tick down scares me more than the Inland revenue, New BRK contracts & Spanish ATC all put together!

Happy Flying guys :ok: