Dutch Ryanair pilot loses court case vs tax man: not deemed self-employed

[Longhitter]

Sorry it's not available in English:

https://www.trouw.nl/home/rechter-ziet-piloot-als-werknemer-en-niet-als-zzp-er~ab0a6652/

Bullet points:

- Judge rules in favour of Dutch Tax Authority.

- Pilot not self-employed as:

1. only one company using services of the pilot in question through only one agency
2. company holds position of authority in relation with pilot
3. pilot has to meet criteria not compatible with being self-employed
4. company decided when and where pilot was to work / fly.

- The judge ruled that the pilot was deemed to be employed by Ryanair.

- Ryanair played their usual mantra: not aware of any court case involving Ryanair, if pilots have a tax liability in The Netherlands they will be refunded their tax paid in Ireland by the Irish Revenue regardless of the question whether they are self-employed or employed by Ryanair.

- According to a Dutch professor of fiscal economics this verdict opens the door for investigation of Ryanair and the agency through which the pilot was employed by tax authorities.

[172_driver]

As a whole this sounds like a victory for the pilot community, if this case will be precedent for future cases. If he wasn't self-employed than someone else was. That entity must have been responsible for paying the social security, as that is most often an employer's responsibility (with some countries having an employee share).

[Kim Jong Il]

RYR and Norwegian's crewing policies are just criminal. Temporary contracting for a probation period or for peak season is fine. But the pilot worked 6 years as contractor for only 1 client! I don't feel sorry for him the court ruled he has to pay back taxes. He should've left RYR as soon as he could. The only way this will change is when RYR can't crew the airplanes.

[INKJET]

In respect of Norwegian there are no self employed pilots all pay tax & social insurance deducted by their local employer be it OSM ( short haul) Rishworth ( Long haul )

So no issues for pilots flying for Norwegian, TBF Norwegian saw this coming down the line 3 years back and ditched Conair & Arpi in favour of OSM so all should be clean

[Kim Jong Il]

Inkjet, I am not saying Norwegian pilots aren't paying their taxes. I am saying that working as a contractor for many years for one company without having the chance to obtain a direct employment is repulsive.

[PENKO]

So what?
How many aircraft does Ryanair base in the Netherlands, 2?
What you need is a court case in Ireland, England, Germany where the bulk of Ryanair pilots live and work.
Dutch tax rules apply in the tiny flat Dutch countryside only, what precedence are we talking about?

I'm not saying this is not a nice victory for 'the pilots vs. Ryanair', but as far as precedence goes this seems very....local. And a bummer for the individual pilot of course.

Oddly this was FRONT page news in the NL. Why on earth?

[noflynomore]

Following the recent Pimlico Plumbers ruling https://www.theguardian.com/business/2017/feb/10/pimlico-loses-appeal-against-plumbers-worker-status-in-gig-economy-case this "self employed" scam is coming unravelled at last. It won't take much for other EU courts to follow this ruling - indeed it would be hard for them not to.
Maybe, a decade too late, this iniquitous fiddle is coming to an end.

[Scuderia46]

How many years has this pilot worked for Ryanair? And what is the fine he will have to pay?

In Italy, the court of Bergamo ruled that all is fine with Ryanair practices. I stand to be corrected.

Yeah welcome to Italy, where money talks and takes care of everything. Coincidence that Ryanair announced massive expansion in Italy combined to this court ruling? I trust the Dutch court system more than the Italian to be fair. And then I don't even mention the time it takes to handle a case......

Loads of Ryanair pilots better brace themselves, the Germans and British will soon follow. Justice is finally served.

[Longhitter]

There will be no fine to pay as this case was not brought to court after an investigation by the Dutch tax authorities, but by an assessment of the tax return the pilot in question had filed himself. It is a dispute over his status as self-employed / employee rather than a criminal case over tax-evasion. He will simply have to pay tax as an employee in stead of a self-employed individual.

The more interesting consequence is what the Dutch government will do next. If Ryanair is deemed to be the employer of pilots based in The Netherlands, then Ryanair is liable for the employer part of social security premiums and labour taxes applicable in The Netherlands. Not a huge number of pilots indeed, but if Ryanair has to pay these employer premiums and taxes for all their crew based at EIN it amounts to a nice sum of money and automatically puts all this crew in the Dutch social security system as employees (and entitled to all applicable benefits, such as sick pay etc.).

That is a precedent if it happens, and in previous cases like Marseille Ryanair pulled their crew out of France quicker than you can say: 'bogus self-employment'.

[INKJET]

Kim jong Il

All Norwegian short haul pilots are employed by OSM which in turn is part owned by Norwegian air resources, the pilots are not on fixed term contracts, but are permanently employed by OSM. So they are not by definition contractors denied employment, having said that most would prefer the comfort blanket of being employed by Norwegian directly, I suspect that sooner or later a country or union will bring a case to show that the true employer is Norwegian because in reality OSM provide HR services and not much else, even payroll is outsourced which is no bad thing.

[Direct Bondi]

"Permanently" employed OSM agency pilots are temporarily rented to a Norwegian airline. The Norwegian airline may return the pilot(s) to OSM without notice, reason or recourse. The notice period is with the employer OSM, not the Norwegian airline. A job security fear culture is created.

The REAL employer is the key factor.

EU law defines “the employer” as the entity controlling the working life, days off, vacation and providing the materials and equipment to do the job. Two publications atypically employed pilots, and those purportedly representing their best interests, should read:

http://www.ilo.org/wcmsp5/groups/public/@ed_dialogue/@dialogue/documents/publication/wcms_209280.pdf

https://www.eurocockpit.be/sites/default/files/report_atypical_employment_in_aviation_15_0212_f.pdf

There are collective bargaining issues for pilots flying for Ryanair and Norwegian (pilots at Norwegian are represented to service provider agency OSM, not to the airline). The remedy exists for both groups to significantly improve their lot. The first step is to establish a court ruling the AIRLINE is the employer. Legal rulings in Scandinavia and the USA have recently determined the Norwegian airline to be the employer.

The days may indeed be finally numbered for limited companies and service provider agencies, employing and renting pilots to airlines from PO Boxes and broom cupboard offices, and for those airlines taking advantage of such employment circumvention, shell game schemes.

[212man]

There will be no fine to pay as this case was not brought to court after an investigation by the Dutch tax authorities, but by an assessment of the tax return the pilot in question had filed himself. It is a dispute over his status as self-employed / employee rather than a criminal case over tax-evasion. He will simply have to pay tax as an employee in stead of a self-employed individual.

The more interesting consequence is what the Dutch government will do next. If Ryanair is deemed to be the employer of pilots based in The Netherlands, then Ryanair is liable for the employer part of social security premiums and labour taxes applicable in The Netherlands. Not a huge number of pilots indeed, but if Ryanair has to pay these employer premiums and taxes for all their crew based at EIN it amounts to a nice sum of money and automatically puts all this crew in the Dutch social security system as employees (and entitled to all applicable benefits, such as sick pay etc.).

That is a precedent if it happens, and in previous cases like Marseille Ryanair pulled their crew out of France quicker than you can say: 'bogus self-employment'

I find it incredulous that either a large corporation (RYR) or a supposedly intelligent individual could genuinely believe that stating 'self-employed' was legitimate. My wife is registered as a ZZP (self-employed) in the Dutch system, as a freelance dance instructor, and it is abundantly clear when filling in the tax returns (and looking at the guidelines for eligibility) that working full time for a single 'client' does not qualify!

[UAV689]

Very interesting...

Now with storm and the accountants your forced to use you have to pay soc security tax as employers and employees so in theory countries will get their tax take regardless.

If fr were forced to make everyone employed, i can only envisage how bad those t+c will be....and they would get away with it as they always do...

[KayPam]

When will European authorities put an end to this ... practises ?

[UAV689]

I am surprised that some of the legacies dont take this up and try and take ryan to court.

Think about it. Goverments are not allowed to fund airlines, been illegal in eu for years.

Ryan hire 1000 new co-jos a year. They are instructed to claim all their training costs (tr, uniform,hotels) back via these fake shadow companies, and most co-jos dont pay tax for 3 years. So by claiming off their tax bill ryan have pushed a huge chunk of their costs on to local governments! Legacy airlines cannot compete with this unfair playing field

[Heathrow Harry]

Never understood why the Revenue in the UK doesn't chase RyanAir - it's a clear breach of IR35 and all sorts of other legistlation...............

[PENKO]

Maybe not that clean then?

[wiggy]

I am surprised that some of the legacies dont take this up and try and take ryan to court.


I think that is effectively what happened in the Marseille case that Longhitter mentioned, as I recall it from the French Press somebody locally ( either AF, one of the AF syndicats, or even the local "council" started the ball rolling).

[172_driver]

Now with storm and the accountants your forced to use you have to pay soc security tax as employers and employees so in theory countries will get their tax take regardless.


You are probably aware, but to highlight for other followers of this thread. It's a EU directive which mandates that for aircrew you should be socially insured in the country where you are based. It hasn't really got anything to do with which accountant you use.


Unless things have changed with these Ltd. co set-up Ireland gets the vast majority of pilot's income tax. The social security is a tax that's levied on the employer (plus in some countries, a employee share). You could say that if you live and work in a continental Ryanair base, that country should receive income tax + social security, not either or.



If fr were forced to make everyone employed, i can only envisage how bad those t+c will be....and they would get away with it as they always do...


I think that's a fallacy. The T+C are that bad already. They fool new-joiners by saying you earn €75 psbh. What they don't tell you is that what your Company earns is supposed to cover the social security payments + a salary (to you, on which income tax will be deducted).

[INKJET]

I was told that even FR pilots employed directly are on time limited contract which finish age 60 after which you might invited back as a contractor, that has got to be age discrimination if there were truly employed, can anyone confirm whether this is true?

[172_driver]

What they don't tell you is that what your Company earns


Or they actually do tell you, it's just that new-joiners are too gullible/desperate/uneducated to understand what they're signing.

[172_driver]

I was told that even FR pilots employed directly are on time limited contract which finish age 60 after which you might invited back as a contractor, that has got to be age discrimination if there were truly employed, can anyone confirm whether this is true?


Correct, a few years ago at least.

[RAT 5]

If a contractor is deemed to be an employee then the are entitled to holiday pay, sick pay and many many more benefits, including pension payments etc. There is much much more to this than just tax & social payments. What will be interesting is what the individual will do about it; and what groups of other pilots, and unions, will do about it, and what other tax authorities will do about it.
And don't forget the cabin crew.

[ExDubai]

So what?
How many aircraft does Ryanair base in the Netherlands, 2?
What you need is a court case in Ireland, England, Germany where the bulk of Ryanair pilots live and work.
Dutch tax rules apply in the tiny flat Dutch countryside only, what precedence are we talking about?

I'm not saying this is not a nice victory for 'the pilots vs. Ryanair', but as far as precedence goes this seems very....local. And a bummer for the individual pilot of course.

Oddly this was FRONT page news in the NL. Why on earth?
Wait and see... There was a reason for the raids on the german bases. Last year FR negotiated a deal with a pilot a couple of hours before the court trial started. This will not happen with the current investigations. Interesting times ahead.

[Avenger]

Harry "Never understood why the Revenue in the UK doesn't chase RyanAir - it's a clear breach of IR35 and all sorts of other legistlation..............." Simple.. they have bigger fish to fry. If they really wanted to do anything about this they would have done so years and years ago. The UK HMRC operates a disclosure policy and fine system,, if pilots do not disclose their incomes there is basically bugger all the HMRC can do..Raids on houses etc are pie in the sky..if people are earning money and more importantly spending it in the UK they don't give a fig..thats compared to other bases where folks may earn money and "export it" ..Can't see any changes on the horizon..

[ExDubai]

If a contractor is deemed to be an employee then the are entitled to holiday pay, sick pay and many many more benefits, including pension payments etc. There is much much more to this than just tax & social payments. What will be interesting is what the individual will do about it; and what groups of other pilots, and unions, will do about it, and what other tax authorities will do about it.
And don't forget the cabin crew.
Yepp, I'm really looking forward what VC will do in Germany. If they are as agressiv as with LH that could be a pain in the ass for MoL

[galaxy flyer]

As a Yank, why does this crazy exist? In the US, the crews would have to employees under law and union contract. Might it be that companies can duck out on legally required benefits by using contractors? Maybe the economic regulations need to change?

[172_driver]

Might it be that companies can duck out on legally required benefits by using contractors?

Definitely, no sick pay, no paid holiday, no maternity/paternity leave, no part time. And best of all, no union to fight. You're only paid when you work, no more no less.

So then you'd think, as a contractor you take holiday when you want, go on part time as you desire. Nope, didn't think so. You signed those rights away in some odd 3 party contract, of questionable legality, when you joined Ryanair as well.

[ExDubai]

As a Yank, why does this crazy exist? In the US, the crews would have to employees under law and union contract. Might it be that companies can duck out on legally required benefits by using contractors? Maybe the economic regulations need to change?


Using loopholes is very popular. If you get not paid when sick you're thinkig twice staying at home or going to work.

[galaxy flyer]

Stil, why is it allowed? Scope clauses kill any thought of it here--scope defines exactly what flying will be done by whom. Isn't there something in EU law that would prevent contracted out work? ?US labor law would prevent it, too.

[FlyingStone]

As a Yank, why does this crazy exist? In the US, the crews would have to employees under law and union contract. Might it be that companies can duck out on legally required benefits by using contractors? Maybe the economic regulations need to change?

Not trying to start US-EU war, but compare starting FO salary at US regionals and EU LCCs.

Less benefits than the US regionals? Definitely. Worse package all-around? Depends, but very much doubt it.

[172_driver]

Stil, why is it allowed? Scope clauses kill any thought of it here--scope defines exactly what flying will be done by whom. Isn't there something in EU law that would prevent contracted out work? ?US labor law would prevent it, too.

As long as the referee is looking the other way....

Court cases in the last few years has made Ryanair close their bases in France, Denmark and Norway. Courts ruled that local labour law shall prevail, not Irish, as it should.

Additionally, the self-employment 'checklist' as mentioned earlier in this thread is there to prevent individuals from making unreasonable tax deductions. There are a lot more tax deductible expenses you can make as a firm rather than private individual. The obvious abuse of this has been under the cover of Ireland, which is known in Europe (and around the world) as corporate haven.

[UAV689]

In answer to question regarding over 60s forced to become contractors this was the case, but one legendary chap out right refused to give up his contract, so i think most people (with backbone) push back when the company trys that stunt on them.

[Piltdown Man]

Galaxy - You are totally correct. With possibly a few exceptions, every Ryanair pilot is really a Ryanair employee. They can work only for one employer, have their base, days off, roster dictated, the uniform they wear dictated by their employer and I'll hazard a guess, all communication is via the pilot, not via their company. That neither contracting nor self-employment.

But MOL is an aggressive, nasty piece of work. You turn up with a knife and he'll have a gun and your first born as hostage. He and has yet tackled by taxmen with balls and backbones. This appears to be the first. With any luck, tax authorities around Europe might grow the bits they are missing and actually deal with with RYR as they should. It is a disgrace and we must stop allowing people like MOL riding rough-shod over every piece of employment protection legislation in the pursuit of cheap fares. Pay people what they deserve, have proper contracts etc. If you want to offer third world employment terms and conditions, sod off and operate there!

[gearlever]

Will Ryanair pay the pilot's lawyer and costs of the court case?

[fox niner]

FWIW, here is the direct link to the court publication: (in dutch of course)
https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBGEL:2017:224

I might give it a try to translate it into english some time later.

While the court decision speaks for itself, there is another significant aspect to this particular case that you will not find in any newspaper.
Based on the exact wording used in the document, and the semantics used by the court as they wrote down their decision, it appears that this RYR pilot was actually quite HAPPY with the contract as it was set up. He was trying to defend his own position of course, BUT ALSO position of RYR, and the whole scam of intermediate companies that goes with it.
And that is quite damning.
If you are stuck in a bad position, don't try and defend your miserable situation by exhonerating the company that is causing this. (Ryanair)

[shabon]

Good example of Stockholm Syndrome

[RAT 5]

Sounds a little naive, lax preparation of a court case and perhaps some inept advise from legal advisors. One would have thought it would have been better to establish the true employment status, i.e. being an employee of the airline, and then let the tax liability & obligation fall where it may. If it is deemed the pilot did not pay the correct tax and social premiums the mitigating circumstances of the Ltd. construction would be quite strong. They might not remove completely any back tax demands, but being an employee would spread the pain and reduce/remove any penalties.

[Harry Wayfarers]

In one of my previous lives I worked 'offshore' for some 6 years, supposedly self-employed and responsible for paying my own social security and taxes, less any out of pocket expenses of course, but I never did and I got away with it.

In a later previous life I worked for an agency, I became in charge of flight crew recruitment, and if any one of those self-employed flight crew had been paying their social security and taxes then I would be shocked ... I'd buy them a beer.

So with this case of a Dutch national, presumably domicile in the Netherlands, had he been paying his own taxes and social security as a self-employed individual and the authorities adjudicated that he was employed, rather than self-employed, then the difference in taxes payable wouldn't be so significant to make a big song and dance regarding.

So is this scenario that he hadn't been paying any taxes etc. at all or he had only been paying taxes etc. declaring himself as a self-employed individual?

[Kim Jong Il]

Am I correct when I write that you don't get paid if the flight is cancelled for whatever reason? I mean it's not that you could pursue another gig for the same day?

[RobsonCanolo]

Harry i think this dutch pilot initially needed to pay taxes and social charges in Ireland and then in the Netherlands using their tax rules there. Usually being able to claim the Irish bit already paid and then pay some more in the Netherlands if needed using their taxcode.

Interesting to see courts seeing through these employment contracts also. Is this going to spread further within the EU about this or is this limited to the Netherlands presently?

[INKJET]

If one looks at the cost base of the major European LoCo airlines then it clear that something doesn't quite add up, the lowest are of course FR & Wizz air then there is a big gap before you get to Norwegian and easy jet, given that they all pay the same price for fuel, aircraft and to some degree landing fee's, then the rest must come down to a combination of staff costs and efficiency, this is where FR wins, it is ruthlessly efficient but its staff cost base is well down on the next group of major airlines.

The self employed 3 director ltd company is a joke, i have heard of pilots naively thinking that offsetting a new MacBook a year and 3 iPhones will wash, thats before the joker from Scandinavia but working in Milan, buying a SAS business class ticket 100% refundable home, using the invoice for his travel costs before cancelling the flight and jump seating home with his airline will go unnoticed month after month, there are many pilots out there who have had their type rating paid for by the taxpayer and then some.

The EU country courts have no balls, they are still terribly grateful for Ireland voting to stay.

Nothing will come of this

[gearlever]

Umstrittenes Beschäftigungsmodell: Ryanair-Mitarbeiter im Visier der Fahnder | tagesschau.de (http://www.tagesschau.de/wirtschaft/ryanair-127.html)

- German prosecuter are about for four FR Managers, one has left FR already
- German prosecuters are about for 820 FR pilots, two agencies and four tax consultants
- McGinleyAviation is accusing FR to have them asked to use a system which has already been used by another agency
- McGinleyAviation also says FR suggested certain tax consultants to be used
- FR (Edward Wilson) say they don't know about any investigation
- A lawyer of Brookfield Aviation told the prosecuters FR did establish a system of certain pilots job agencies and tax consultants
- It's about several million Euros

[ExDubai]

Interesting development. Let's see when FR start to close the german bases ;)

[172_driver]

Am I correct when I write that you don't get paid if the flight is cancelled for whatever reason? I mean it's not that you could pursue another gig for the same day?

You are correct.

[Icelanta]

The pilot IS NOT RESPONSIBLE AT ALL in case of False Selfe Employment according to EU legislation.
It is ALWAYS the EMPLOYER who is guilty of employing an employee under false self-employment pretention.
Hence, in the Netherlands, the EMPLOYER, NOT the employee is responsible to pay not only all taxes, social security to the State, but also ALL normally received bonusses, holiday payments, sick payments etc to the pilot.

It is NOT the Pilots who are in trouble for they are victims, it is RYANAIR who is deemed guilty.

[wiggy]

Icelanta.....
The pilot IS NOT RESPONSIBLE AT ALL in case of False Selfe Employment according to EU legislation.

If you are in the UK ( which last time I looked is still in the EU) I'd take professional advice on that, because at present the UK tax man may well think otherwise, although the rules are I believe slowly changing to put more onus on the "employer" to ensure they are compliant - see uk rules regarding being inside or outside IR35 and also " disguised employment.

Short comment here regarding penalties for "employees"/"contractors in the U.K. Contractors' Questions: What now that HMRC says I'm inside IR35? :: Contractor UK (http://www.contractoruk.com/ir35/what_now_hmrc_says_im_inside_ir35.html)

Comment about proposed rule changes:

http://www.personneltoday.com/hr/changes-to-ir35-disguised-employment-rules-put-hr-in-the-firing-line/

Again, definitely one for the experts, certainly in the U.K.

[Stan Woolley]

Piltdown Man
But MOL is an aggressive, nasty piece of work. You turn up with a knife and he'll have a gun and your first born as hostage.

I wanted to tell of my own experience at Ryanair's hands, which, hopefully, might show a different side to MOL, after all, he's very much in control of what happens in the company.

I had been working as a TRE/ line trainer with them for about six years when I suffered a life changing stroke at age 50. On the face of it I was deep in dwang! I wasn't personal friends with any of the management or anything like that, just an ordinary joe. But Ryanair have been amazingly good to me, they had an insurance scheme which I was fortunate enough to qualify for, and they have been nothing short of extremely kind ever since.

I know that they can be aggressive, it's a big boys game, but I have heard a similar story to my own where there has been a life changing medical event happen with other individuals. I know for certain that other companies have not been so good when this has happened.

Maybe I'm just 'lucky'? That has been my experience, so MOL obviously has a heart somewhere within his 'darkness'. :)

[Stan Woolley]

I want to add to my post above my own thoughts on this 'tax issue'.

Most people know when they are walking a fine line with 'tax dodging' or anything else. Very few of us find ourselves 'forced' into anything, but we squeal like little piggies when the **** hits the fan.

Any pilots who don't feel comfortable with Ryanair's setup aren't forced at gunpoint to join. Go try somewhere that you know won't have these difficulties. It's quite simple.

But it never is, where humans are concerned. :ugh:

[Piltdown Man]

Stan, that is good to hear. I hope they continue to look after you until you are able rehabilitated and are able to resume a earning a crust. So from this I presume you were actually employed directly by RYR, which is also good to hear. But I think all of your permanent colleagues should also have the same status.

[Stan Woolley]

But I think all of your permanent colleagues should also have the same status.

Don't disagree. But we are our own worst enemy, we are very willing to look one way or the other depending which 'suits' at the time. I think things won't change much until we face facts and become less selfish.

Just my 2c A stroke sure puts things into perspective.

[ExDubai]

The pilot IS NOT RESPONSIBLE AT ALL in case of False Selfe Employment according to EU legislation.
It is ALWAYS the EMPLOYER who is guilty of employing an employee under false self-employment pretention.
Hence, in the Netherlands, the EMPLOYER, NOT the employee is responsible to pay not only all taxes, social security to the State, but also ALL normally received bonusses, holiday payments, sick payments etc to the pilot.

It is NOT the Pilots who are in trouble for they are victims, it is RYANAIR who is deemed guilty.
Interesting theory..... It looks like that the german prosecutors do not agree with your theory.

[racedo]

Stil, why is it allowed? Scope clauses kill any thought of it here--scope defines exactly what flying will be done by whom. Isn't there something in EU law that would prevent contracted out work? ?US labor law would prevent it, too.

Think we can look at US laws and say thanks but no thanks as Airlines just file for Chapter 11 again and again and employees left with nothing irrespective of length of service.

[Icelanta]

ExDubai,

It is not a theory. A couple of years ago I hired a very well respected Law firm to find out what the legislation is regarding pilots whi are " self employed".

I suggest anyone who is in a situation where Tax predators want your skin do the same and attack the taxman if they want your hard earned money.

Contractors are victims, not criminals. And it is typical for the spineless Pilot community to side with those wanting to hurt our colleagues.

[172_driver]

Contractors are victims, not criminals. And it is typical for the spineless Pilot community to side with those wanting to hurt our colleagues


On one level contractors are victims, as new hires are forced into an arrangement they know little about and can come back to haunt them when things go awry.


However, those contractors who willfully cross the border and think they won't be noticed I don't have much sympathy for.

[dirk85]

Victims my ass, most of the FR pilots I know are perfectly aware of what they are doing, and happily take advantage of it, in order to pay less or no taxes at all.

[gearlever]

Contractors are victims, not criminals.Victims ?:ugh:

May I ask who needs these agencies?

[JaxofMarlow]

Victims. Utter tosh. Whilst employing contract pilots for the long term is dubious legally speaking and moves across EU will show this to be the case, the pilots are not "victims". If they pay full tax as a contractor then they have nothing to fear but if not they do so knowingly and are happy to take the short term advantage it offers.

[UAV689]

Victims or not..

From what i can tell it very much depends on the nationality of the said pilot! I would guess 90% of uk/dutch/german/ scandi's want a full time fr contract. Southern med and eastern europeans love contracting.

Must be a mentality thing, and by no means scientifically proven!

[Harry Wayfarers]

In two of my previous lives:

1. Working for a long-haul cargo operator whereas the crews were contracted (paid) for 80 block hours per month whilst subject to JAR FTL's ... The majority, working away from their home domiciles, all they wanted to do was rack up the 80 hours as quickly as possible before legging it back to N. America, Germany or wherever, alas the JAR FTL's often scuppered their plans, all were 'self-employed' individuals but I doubt that any of them were paying tax/social security as I wasn't paying either.

2. As as 'in charge' of an agency flight crew recruitment, generally speaking we met two types of contractor flight crew, the genuine and/or younger naive who just wanted to work and we dictated to them the self employed nonsense and the 'professional contractor' who knew the loopholes as a matter of course and had no intention of ever paying tax/social security if they could get away with it.

Reading previously regarding McGinley, I worked for the previous agency that McGinley bought, I know the Ryanair contract that they entered in to because it was the one that I had previously worked, and Ryanair contracts, for an agency, were only worth entering in to if it was in volume, I mean a volume, rather than just a handful, of pilots placed.

Just another contract of that agency revenued EUR15,600.00 per annum per Captain and EUR10,800.00 per First Officer and these were typical of industry rates, on the other hand hand Ryanair dictated an agency rate of EUR8.00 per block hour per Captain and EUR5.00 per First Officer thus based on an absolute maximum of 900 hours per annum then just EUR7,200.00 per Captain and EUR4,500.00 per First Officer per annum ... not worth entertaining unless in volume!

McGinley didn't have that volume, Brookfield had the volume and with Ryanair's previous HR manager 'Declan' at the helm, Brookfield would jump through Ryanair's hoops because they were sleeping together, McGinley would jump through the hoops because they were always playing 'catch up'!

[INKJET]

I was once told by an old hand in the contracting game that (when i asked him why he didn't get a full time job with one of the airline) its all about the tax and not paying it, he was living in Malta but would never work for one company more than 12 months and never in the same country, Spain one year,Canada for a winter contract, the far east, China, South America, Africa and on went the list, he claimed to be self employed, but wasn't officially living anywhere, always paid all his bills in cash, no mortgage, no loans even his €300'000.00 motor yacht paid for in cash, i asked about what he did for media care, he would fly back to the UK and walking into a walk in centre, with his British passport, staying with friends no fix abode, down on my luck.....the down side? well he said sometime you have to fly junk that Europe would scrap, ignore duty hours, upside didn't have to worry about security screening and disclosure Scotland or 8 hours bottle to throttle rules, i guess its just a different mindset,

[ExDubai]

ExDubai,

It is not a theory. A couple of years ago I hired a very well respected Law firm to find out what the legislation is regarding pilots whi are " self employed".

I suggest anyone who is in a situation where Tax predators want your skin do the same and attack the taxman if they want your hard earned money.

Contractors are victims, not criminals. And it is typical for the spineless Pilot community to side with those wanting to hurt our colleagues.
Have a chat with the guys from VC or RPG. There is a reason why a lot of German FR Pilots are in trouble. Worst case scenario is that they have to pay for the last 5 years+interest and a fine.
And those numbers are not peanuts

[the_stranger]

The pilot IS NOT RESPONSIBLE AT ALL in case of False Selfe Employment according to EU legislation.
It is ALWAYS the EMPLOYER who is guilty of employing an employee under false self-employment pretention.
Hence, in the Netherlands, the EMPLOYER, NOT the employee is responsible to pay not only all taxes, social security to the State, but also ALL normally received bonusses, holiday payments, sick payments etc to the pilot.

It is NOT the Pilots who are in trouble for they are victims, it is RYANAIR who is deemed guilty.

That's partly not true. While the employer is responsible for the correct payment of certain things like social security, every person is responsible for the correct application of the tax forms.
If you file as a contractor (so basically as a business) you pay vastly different taxes and have other perks and duties than when you apply as a "normal" employed person.
So when the court decides you are in fact not a contractor, and you filed your taxes that way, you must now file the correct tax forms probably resulting in having to pay back taxes and possibly a fine for filing too late or even for filing incorrectly.

That will not bring you in trouble with the law, but it might cost a lot of money, and owing money to the Dutch tax/state can cause trouble.

[gearlever]

That will not bring you in trouble with the law, but it might cost a lot of money, and owing money to the Dutch tax/state can cause trouble. In Germany it will bring you in trouble with the law. They are very keen on tax cheating.
Boris Becker, Uli Hoeness, Alice Schwarzer, Klaus Zumwinkel, Paul Schockemöhle, Peter Graf (Father of Tennis Pro Steffi, 3 years prison) to name some prominent individuals.

[Icelanta]

Once again,

It is the EMPLOYER, the one who made up the illegal work relation who is WHOLLY responsible.
ALL taxes have to be payed by the employer as the employee acted according to the information he got from his employer regarding tax .
This means all bonusses, thirteenth month, etc etc. must be payed by the employer directly to the employee.

Also, the employee is NOT deemed responsible for knowing legistlation, it is the employer who is responsible for the legality of the contract. This voids all claims like " you had a choice not to sign this illegal contract" etc...

The employee is NEVER financially responsible.

I do not give a toss about what some guy in Germany thinks, they have to abide by the EU law, anybody made victim by an overzealous tax penlicker should fight this to death obviously.

As a sidenote, it is our responsibility to our financial wellbeing to avoid payment of taxes as much as legally possible. It is your duty to find the best way to minimize tax. It is called financial responsibility.

[dirk85]

This is so untrue, in Italy the fiscal responsability is strictly personal, and the ignorance of the law is in no way an excuse, especially when you are gaining advantage out of it.

Ignorantia juris non excusat.

[ExDubai]

Once again,

It is the EMPLOYER, the one who made up the illegal work relation who is WHOLLY responsible.
ALL taxes have to be payed by the employer as the employee acted according to the information he got from his employer regarding tax .
This means all bonusses, thirteenth month, etc etc. must be payed by the employer directly to the employee.

Also, the employee is NOT deemed responsible for knowing legistlation, it is the employer who is responsible for the legality of the contract. This voids all claims like " you had a choice not to sign this illegal contract" etc...

The employee is NEVER financially responsible.

I do not give a toss about what some guy in Germany thinks, they have to abide by the EU law, anybody made victim by an overzealous tax penlicker should fight this to death obviously.

As a sidenote, it is our responsibility to our financial wellbeing to avoid payment of taxes as much as legally possible. It is your duty to find the best way to minimize tax. It is called financial responsibility.
Tax law isn't EU responsibility, criminal law neither.

[wiggy]

The employee is NEVER financially responsible.

I do not give a toss about what some guy in Germany thinks, they have to abide by the EU law,

It is no good shouting, certain authorities simply don't agree with you. This was updated just two days ago:https://www.gov.uk/guidance/ir35-find-out-if-it-applies

[fox niner]

Let me point out, as a citizen and resident of NL, that every single individual is PERSONALLY responsible for your own tax payments. No excuses, no exeptions, nothing.
Of course you can have others (such as tax experts) fill it in for you, but still, your own bloody responsibility.
If you discover, as an employee, that your employer is evading tax payments: point it out.

Of course, in this particular case, this would have meant that RYR would terminate your contract, and this dutch RYR pilot would have been without a job. So be it.
The Netherlands has a very efficient tax system. There is NO CHANCE that anyone, or any company such as Ryanair, could ever expect to be able to beat the tax system.
This isn't Greece, or Albania.
The only reason why Ryanair was not held accountable by the judge in this case, is because Ryanair was officially not a party in these civil proceedings.
So: SUE RYR. It is the only option. Hold them accountable.

[JaxofMarlow]

RAT 5 - it is always easy to take things out of context if you only quote part of a sentence. I am well aware what the issue is. But I was responding to the rather dubious notion that the poor pilot is always a victim.

[Avenger]

"IR35 doesn’t apply if you work for a client through a Managed Service Company (MSC) or agency, for example an employment agency."

"Using an agency or MSC to provide a service to a client
There’s different legislation to follow if you provide services to an employer or end client through a third party agency or MSC.

You have to comply with agency legislation rather than IR35 if you provide services to an employer through a third party agency and technically, you’re not a direct employee of either.

If the agency is based outside the UK the client may be liable to operate PAYE and make the appropriate deductions, returns and payments of tax and National Insurance contributions instead.

You need to follow MSC legislation rather than IR35 if you provide your services to end clients through an intermediary company which is controlled and run by a third party service provider."

Sounds like the case?

[gearlever]

Avenger, you quoted UK law.
As ExDubai mentioned state law e.g. NL or D comes into play.
Very complicated I'm afraid.

[Avenger]

Yes I quoted UK law ad there was a suggestion that HMRC would come out guns blazing which is not the case, they don't care, as for other states, that's another issue. Even the Dutch guys at NAS are trying to claim back taxes in NL for training costs etc so we shouldn't be surprised

[RobsonCanolo]

Just another contract of that agency revenued EUR15,600.00 per annum per Captain and EUR10,800.00 per First Officer and these were typical of industry rates, on the other hand hand Ryanair dictated an agency rate of EUR8.00 per block hour per Captain and EUR5.00 per First Officer thus based on an absolute maximum of 900 hours per annum then just EUR7,200.00 per Captain and EUR4,500.00 per First Officer per annum ... not worth entertaining unless in volume!

Can someone enlighten us what work these agencies need to do on a daily basis for making 7200/4500 a year on the back of someone else?

After all they don't provide a single unit of output to the economy except providing a shield to some of the responsibilities when hiring staff.

[qwertyuiop]

That is a very simple question to answer.
They allow the employer to avoid NIC in the U.K.
This alone makes it an efficient method of employment. There are also other advantages.
The whole tax avoidance system needs to be closed ASAP!

[UAV689]

for the life of me why the likes of BA dont tap up a UK FR driver and offer them a job, cast iron guarantee, with the premise of said person taking fr to court (just like uber and plimico plumbers have recently lost...)

i mean ba are having to keep up with the loco world with an un-even playing field, they cannot win that unless they get dirty themselves...and by getting dirty i dont mean resorting to selling m&s food on board..!

[Ian W]

Yes I quoted UK law ad there was a suggestion that HMRC would come out guns blazing which is not the case, they don't care, as for other states, that's another issue. Even the Dutch guys at NAS are trying to claim back taxes in NL for training costs etc so we shouldn't be surprised

I am not sure it is a question that HMRC 'don't care', it is more that they don't think it is worth the effort. But, all of a sudden one of the HMRC inspectors can decide to investigate and it can be a rather painful experience. In a previous contracting existence an acquaintance was running a rather involved scheme that was legal but being paid via intermediaries. Taxman just presented a 5 figure demand and said you owe us this so we are taking it. It took several years for him to get a proportion of the money back. Similarly a group of contractors under one agency were running a similar scheme, Belgian tax decided that their scheme was invalid and demanded several years back tax from over a hundred contractors to be paid immediately.
The tax laws are arcane and fundamentally different in each European country and their approach is different again to other countries. IR35 put the onus on the contractor to pay all the national insurance and 'employer' taxes as HMRC considered the contractor was the one 'avoiding' tax. In the US it is different and if the IRS decides that a contractor is really an employee they chase the employer for all the relevant employment taxes.

So my experience is that these clever schemes are OK, until they are not. The tax authorities can unravel them very rapidly and backdate their tax demands in a financially painful way.

[Alpine Flyer]

Ryan hire 1000 new co-jos a year. They are instructed to claim all their training costs (tr, uniform,hotels) back via these fake shadow companies, and most co-jos dont pay tax for 3 years. So by claiming off their tax bill ryan have pushed a huge chunk of their costs on to local governments! Legacy airlines cannot compete with this unfair playing field

Depending on the legislation training costs can be offset against taxes of employed pilots as well and company paid training, uniforms and hotel are deductibles for the company as well, so the hurt for the taxman is rather negligible here.

Not to condone Ryanair practices in any way!

[Alpine Flyer]

There are collective bargaining issues for pilots flying for Ryanair and Norwegian (pilots at Norwegian are represented to service provider agency OSM, not to the airline). The remedy exists for both groups to significantly improve their lot. The first step is to establish a court ruling the AIRLINE is the employer. Legal rulings in Scandinavia and the USA have recently determined the Norwegian airline to be the employer.

The days may indeed be finally numbered for limited companies and service provider agencies, employing and renting pilots to airlines from PO Boxes and broom cupboard offices, and for those airlines taking advantage of such employment circumvention, shell game schemes.

Pilots and cabin crew at Austria Carrier FlyNiki were hired by a contracting agency and leased to the actual airline but they organised (rather secretly at first, with assistance from Austrian Cockpit Association and the GPA trade union) and threatened to strike unless the company hired them directly and gave them a collective agreement.

Now they're employed by the company and have a collective agreement including seniority. (They enjoyed the benefit of the Austrian statutory right to elect a works council but such rights as well as right to join a union exist elsewhere as well.)

It's up to Ryan/Norwegian/etc. pilots to stand up collectively and demand change. It's up to the rest of us to support them in that endeavour (as long as they really try), simply to stop carriers using these practices dragging down T&Cs elsewhere. Solidarity is not charity, but helping Ryan pilots means helping all pilots.

It's not easy as even in the age of innumerable online communication tools you have to be careful not to fall prey to company people posing as conspirators, but that was the same in the early days of US ALPA ("many a pilots membership card was only discovered on his dead body" or so it reads in "Flying the Line"). It can be done, e.g. by "vetting" possible conspirators through a pilot association or using handles whose identity is only known to the pilot union until a framework strong enough for action has been established.

As long as pilots choose to endure conditions "for a couple of years" or conditions that "are not good but not really bad either, at least better as my previous job", nothing will change. If we'd get Europe working instead of falling apart and go for prosperity for the masses rather than prosperity for shareholders, resulting in more air travel and more work for pilots, Ryanair might fall apart by simply not being able to retain pilots, like it seems to happen with US regionals these days. As long as that does not happened, old-fashioned methods like organizing are needed.

[gearlever]

https://www.vcockpit.de/en/presse/pressemitteilungen/details/news/piloten-der-ryanair-in-deutschland-schliessen-sich-zusammen.html

ENGLISH version of VC note

[Alpine Flyer]

Hopefully VC will continue to push this issue once they have sorted out their new multi-year contract with Lufthansa.

[gearlever]

They do....
Thursday MAR 30th VC will have a meeting with German Pension Insurance.....

Ryanair droht Überprüfung scheinselbstständiger Piloten - SPIEGEL ONLINE (http://www.spiegel.de/wirtschaft/unternehmen/ryanair-droht-ueberpruefung-scheinselbststaendiger-piloten-a-1140492.html)

[RAT 5]

2005

This is from Daily Telegraph. Does it not sound familiar and relevant? A tax advisor friend of mine suggested quite a while ago that a claim for holiday pay would sort out the truth. Seems like they might have been correct.

[recall_checked]

How would one go about making such a claim?

[RobsonCanolo]

Umstrittenes Beschäftigungsmodell: Ryanair-Mitarbeiter im Visier der Fahnder | tagesschau.de (http://www.tagesschau.de/wirtschaft/ryanair-127.html)

- German prosecuters are about for four FR Managers, one has left FR already
- German prosecuters are about for 820 FR pilots, two agencies and four tax consultants
- McGinleyAviation is accusing FR to have them asked to use a system which has already been used by another agency
- McGinleyAviation also says FR suggested certain tax consultants to be used
- FR (Edward Wilson) say they don't know about any investigation
- A lawyer of Brookfield Aviation told the prosecuters FR did establish a system of certain pilots job agencies and tax consultants
- It's about several million Euros

Thanks for the update !

[olav737NG]

Hi guys is it true that ryr pilots have to pay per diem taxes in Spain? cheers