Ryanair FO German base

[Kratz]

Hi everyone,

So far I've heard that that Germany is probably the worst country to be based in in terms of social contributions and taxes. So I was wondering whether there are any German based FOs with a McGinley contract who can clarify.

I've talked to all 3 accounting companies which work with FR and I was told partly quite different information. Contracting PLUS told me that I would have to pay only the employee's part whereas the other two said that I'd have to pay the employer's par as well. The contributions are in total 42,29% of the gross salary (21,76% for the employer and 20,52% for the employee). Therefore it's obviously a big difference.

What I also don't undestand is whether I can count my business expenses towards the social contributions or only towards the Irish tax. E.g. with a gross income of let's say 5000 EUR per month and expenses of 4000 EUR I would pay way less social contributions than without the expenses. Is that so or do the expenses influence only the Irish tax?

Many thanks!

[Burpbot]

Do yourself a favour! Don’t lower yourself to it! Plenty of better jobs out there!

[lansen]

I'm not with FR, but I can tell you something about german taxation laws.
There are five kinds of taxes in Germany. Three of these are social and two salary.

Salary:

Einkommensteuer: Salary tax, which goes linearly from 24-38% - and now come the complicated part - continues to go up to 42% however only on the ammount above 55.000euros. You will have an ammount of 8400€ that is free every year and is not counted into the total amount.

Solidaritätszuschlag: 5,5% of your annual paid taxes. So let's say you are paying 20.000€ in annual taxes. Hence you would pay 1.100€ in "Soli". It's a tax that was invented after 1989 to help rebuild east-Germany. Nobody really knows why it's still around. Ask Merkel.

Now to the Social taxes:

Krankenkasse: Health insurance. In Germany you will have to pay 50% of this if you are employed and 100% if you are self employed. There are a thousand different companies to choose from. Private and "Allgemeine" basically public ones. One sounds fancier than the other, but in the end you can get the same coverage from both, hence one (allgemeine) is a lot cheaper.

Rente: Pension. This is split up 50/50 between you and your employer (Ryanair) or yourself if you have your own company. So 9,35% if you're employed or 18,7% if self employed.

Arbeitslosenversicherung: Unemployment tax. 3% if you are employed and 0% or voluntary 3% if you are self employed.

In the end, the McGinley contracts will in Germany count as self employment.

On top of all these taxes, the german fiscal authorities are usually quite keen on costs that you produce for work. E.g. you'll never have an issue getting tax exemptions for basically anything you'll need for work (of course you'll need two new macbooks each year, an iphone, a xerox printing machine etc). You are even able to declare a room of your appartment as working space and claim an exemption for it rent/m². I would suggest you to get a GERMAN tax advisor and not some shady company that is connected to FR.

Hope this shed some light into the dark.

[Jerry Lee]

Interesting topic since I might be based in Germany, too.

Can one also get tax exemptions for a car and fuel, oil and regular maintenance connected to it?
I wasn't aware that you could declare a room as working space especially as a pilot.

A German tax advisor would be the best choice but I don't think Ryanair contractors are allowed not to use the 3 accounting companies that work with Ryanair.

[lansen]

Jerry Lee

The "Entfernungspauschale" basically "commuting deduction" is 0,30€ per km distance from work, the airport. BOTH WAYS! This is ONLY the case for aircrews, unless it's one way. The maximum deduction you can get is 4700€ per year and you can either chose to get it in form of (1.) a tax return or (2.) in form of a "Freibetrag" basically a monthly tax exemption.

In case of (1.) you will need to maintain a "Fahrtenbuch". Basically a logbook (including gas receipts) of EVERY ride you make. No matter if private or work related.

In case of (2.) you can by showing your rosters prove that you will have around so and so many rides to the airport every month. Thereafter a tax exemption per month is put into your "Lohnsteuerkarte". This is the document that you (self employed) or your employer maintains to calculate your monthly/yearly tax payments.

You can also get a deduction on lease costs of your car. You then however have to prove that you are using your car to a certain extent just for work related purposes. I'm not sure, but I've heard something about 70%.

[lansen]

Other usual pilot costs eligible to tax deductions:

Training costs:
- ATPL - If you can prove that the ATPL was your second education. Highschool doesn't count.
- Type rating
- Assessment costs (Sim, hotel, taxi from the airport, flight there etc.)

Accessories:
- Mobile phone (if it says in your contract that you will need a phone for work)
- Laptop
- Pilot bag (Rimowa or whatever you chose)
- Headset
- Dry cleaning of your uniform

Transportation/Layover costs:
- Taxi (on duty and as long as it's not covered by your employer)
- Homeleave tickets (see below)
- Entfernungspauschale (see above post)


It is also very advisable to maintain your german apartment as your second home "Zweitwohnsitz". This of course only if you are from abroad or if you have another apartment in Germany and the one close to the airport only is used for work. Why? Because you can take use of tax deductable homeleave tickets AND deduct a huge amount (around 70%) of the rent of that second apartment. For this however you will have to prove that you have a "Hauptwohnsitz" (main domicile). This "Hauptwohnsitz" usually has to cost more than your "Zweitwohnsitz", just to prove that your work/standby apartment is only for work related purposes.

[Jerry Lee]

Interesting. So in case 1 I could also deduct the mileage for private related reasons? Seems a bit too good to be true , whereas case 2 is clearer.

[Jerry Lee]

Flight training was my second education. TR and assessment cost will be taken into account even though I got in through APC.

Before getting the job I was already living in Germany with my family (we aren't Germans). Thanks for the tips!

[FlightDetent]

lansen: does the "Soli" come from all the three elements combined (income tax + healt insurance + pension contribution)?

[gearlever]

Soli is related to income tax only.

[lansen]

Jerry Lee

No, only your rides to and from work are deductable. Or from from your main domicile to work (you will however need to prove these rides with a logbook in case you tell them that you are travelling extensive distances a lot).


FlightDetent

Soli is only calculated with your taxed salary. Example: You are paying 20.000€ in annual taxes. In this case your Soli would be 5,5% of 20.000€ = 1.100€ a year or 92€/month.


I forgot about church tax. Hitler invented it in the 30s and it's still around. It's a certain percentage of your salary but I don't know how much it is, since I left the church many many years ago.

Also, regarding your flight training. You can ONLY claim tax returns on your ATPL or any training related expenses if you had your main domicile within Germany or if you were within the german taxation system while this training was accomplished. And this also only if it is dated a maximum of three (!) tax calendar years back in time. Means, right now, you would be able to claim returns for 2015, 2016 and 2017.

[gearlever]

Church tax

Since Weimarer Republik 1916, 17 years befor Hitler.
8-9 % of income tax, depending on state.

[lansen]

Well, since the church are a bunch of nazis (just check the history of the catholic church) I guess my Hitler statement is not completely false :E

[SMT Member]

Just declare yourself an atheist, and you don't have to pay church tax. Otherwise the percentage is depending on which religion you subscribe to; Catholic is cheaper than Protestant, to give just one example.

[Jerry Lee]

Also, regarding your flight training. You can ONLY claim tax returns on your ATPL or any training related expenses if you had your main domicile within Germany or if you were within the german taxation system while this training was accomplished. And this also only if it is dated a maximum of three (!) tax calendar years back in time. Means, right now, you would be able to claim returns for 2015, 2016 and 2017.

Based on what you are telling me, I should be able to deduct the flight training costs then. I have officially been a resident in Germany since 2015 and started my flight training in 2016 and finished in winter 2017.

Good to know. If I get the job and get based here in Germany I might send you a private message, but I am sure I will not be allowed not to work with the 3 accounting firms that collaborate with Ryanair.

[jonesyinthesky]

are you cadets or direct entry first officers?

[Jerry Lee]

Cadet via APC program.
If I get the job, I will do MCC again at 5000 euro and I will be bonded for 6 years for the type rating.

[boyo975]

6 years?........

[Denti]

The "Entfernungspauschale" basically "commuting deduction" is 0,30€ per km distance from work, the airport. BOTH WAYS! This is ONLY the case for aircrews, unless it's one way. The maximum deduction you can get is 4700€ per year and you can either chose to get it in form of (1.) a tax return or (2.) in form of a "Freibetrag" basically a monthly tax exemption.

In case of (1.) you will need to maintain a "Fahrtenbuch". Basically a logbook (including gas receipts) of EVERY ride you make. No matter if private or work related.

No Fahrtenbuch needed for (1), just a roster. There are companies that automatically work through your roster and give you a listing of km and tax deductible expenses (for being away from home) depending on which country you flew to. Not connected, but i use easydutyplan.de for that service.

[lansen]

Then your Finanzamt was nicer than mine. With me they wanted proof of basically everything. Since I didn't have a logbook for all of those rides, they gave me an estimated amount of "free rides" (to and from my homebase) per month.

I would be careful with easydutyplan. It's a nice tool if you do it right. If you exaggerate, which is easily done in the program, you run a big risk of having to pay more in the end or much worse, get a yellow letter that states you have two weeks to pay a huge amount of money to them. :}

[Denti]

Indeed, they handle it quite differently. And there might be quite a difference between a contractor and being directly employed. Never have been a contractor, so i cannot comment on that.

[Damianik]

Hello ,
German tax question as I see many of are up to speed.
Are you guys paying taxes in Germany ? As far as I know , even being a resident myself of Germany I only pay social security and healthcare here . The taxes and USC are taken at source un Ireland and double taxation agreement protects from the the rest . Or you have other incomes that requires a tax return to be filed ? I am in the process to decide to use or not a tax advisor for this year due to a rental income , but I don't see much savings I can make anyways since majority of taxes is taken at source in Ireland. Am I wrong ?
Thanks

[Kratz]

Hey gentlemen,

thanks for the vauable inputs. I did a research on this in the past weeks and some things are not exactly correct for a FO hired through McGinley. In this case you only pay the social contributions in Germany whereas all taxes are paid in Ireland. Therefore: No Soli, no Church tax nada... Thats a good news.

The bad news is that the expenses CANNOT be used to lower the social contributions. You get the money you earn from RYR. Lets say 70k per year. Thats your gross salary + the employers contribution. You need to deduct 17,87% in order to get your gross salary for the tax purpose. That's 57,5k. Thats your gross salary. From this you need to pay 20,52% as an employee's contribution + the Irish income taxes. The only thing you can use your expenses for are the Irish taxes. So even if you have plenty of expenses and will pay zero tax you will never get more than 45,7k net. That is a maximum 65% retention rate. You will never get more out of it unless you opt out from the state health insurance system - which you actually can't, because you would have to earn more than 59,4k gross salary (current threshold for 2018 - goes up by 2-3% every year). But even if you slightly surpass the threshold an will have the option to go for the private health insurance, it brings you some savings in short run but in the long run it is always pretty difficult to get back to the state system. If you are German or wish to stay in Germany in the long term, you'll be surprised that on the contrary to the state system you will have to pay for the health insurance of your kids (free in the state system) and that your mothly payments will go up every year. One day, when you retire you'll have to pay up to 1000 EUR per month just for your private health insurance without any possibility to do something about it. Some people even pay more on health insurance than they get from the state pension system. Anyway... Opting out from the state health insurance brings the theoretical maximum retention for Germany to 76,6% - but you need to pay the health insurance on you own. That means 8 - 9k per year of additional income, 3,5k of which you pay for the private health insurance. Your total net saving is therefore 5,5k p.a. Which is not bad, but it gets much lower when you get older / have kids.

Interesting article on this: ht tps://oconnorandassociates.freshdesk.com/support/solutions/articles/25000013667-are-expenses-allowable-in-germany-to-reduce-the-amount-of-social-insurance-i-pay-

[Denti]

Health insurance is quite dependent on the company where you are insured. I had one premium raise in 15 years, some years where it was lowered, all in all still slightly above half of the state health insurance at much better service. And even with the public health insurance it depends on the company how much you have to pay, as each one can add their own premiums on top of the minimum percentage.

[Kratz]

Well, it's easy. It's like that virtually in any other country. In other countries you act like an idependent contractor - in German Selbständig. Therefore you take your revenue from RYR, deduct your expenses and calculate profit. From this profit you pay the social contributions and taxes. Therefore there is an over 95% retention rate in the first years (due to the type rating costs) in countries as Spain, Italy, Poland, Czech Republic etc. In Germany, on the other hand, you can't act as Selbständig if you're a pilot. Therefore you need to kinda employ yourself and pay both employer's and employee's part of the social contributions. What's even more bizzare is that you pay 1.9% of the gross salary as sick leave insurance (Arbeitsunfahigkeitsversicherung) but if you're sick, you won't get any money. It's because the employer is supposed to pay this money to the employee but as the particular pilot is both ER and EE, he won't get a dime etc...

Long story short, Germany is pretty exceptional on this. I would rather act as standard German independent contractor and pay all the contributions in here including the taxes but unfortunately it's not possible.

In terms of the health insurance. Both options have pros an cons. The one who says otherwise is definitely not objective. One can save quite a lot of money when he is young / has small or no family. On the other hand.... Wait until you're 65. I know people who are retired an pay around 900 - 1000 EUR per month for the premium. Thats 12k EUR per year, 240k EUR if they gonna live until 85. All of this with no other income than the pension.

[jeehaa]

nope......

[Lazydogg]

The cadets that joined my base waited about two years. Some a bit less some a bit more.

[FRogge]

But does everyone who applies for a Ryanair contract get it after a few years? A couple of years ago it was just maybe 10% (if even that) of FOs who got a RYR contract.

Anyway you will most likely do the command upgrade within a couple of years from starting, and by that be forced to be a self employed contractor again.