Like RAT 5 said. If you will be directly employed by ryanair then you must pay taxes in the country where you are based. Portugese taxes aren't the best, ask the easy guys based in Porto and Lisbon....

Well, thats the point. Contract is an Irish one. Although you need to pay portuguese tax on the domestic sectors, international sectors are taxed in Ireland expect social security that is fully taxed in Portugal. I think Italy have the same issues for the pilots based there.
As far as I was told, Easy have Portuguese contracts for pilots based in Portugal.

That is only 3 parts of the puzzle.

Domestic sectors taxed in Portugal
International ones taxed in Ireland
Social security payments in Portugal
Basic pay taxed in = ??????? It should be in Portugal

Or are you not on a proper PAYE contract and employed on one of there magical limited company deals where you are a director.

Issue there is your not a company. Ryanair make you start one. They choose your agency and they choose your accountant and they pick the other guys in your company to join you as a director.

Then you employ yourself but don't pay employer social security payments as there a fortune and you would then earn nothing. So you don't fit that employment model properly either.

I hope it's answer A and your PAYE in Portugal and paying tax there as that's how it should be done.

I think you have to look at each individual country to determine when you are tax liable. Ireland for instance have you tax liable when you are either a resident or your income is derived in Ireland. For some reason Ireland find it appropriate to make it your "tax home" for a) contractors, as their Ltd. is set up in Ireland b) employees, as they're on Irish territority during work, EI-registered aircraft. Finally it seems some countries, Italy and Portugal at least, have spoken out against this relationship and have you pay local taxes on domestic routes. I found it very strange to pay the majority of my taxes in Ireland even though I had never put my foot on that island a single day that year. Double taxation treaty with my country of residence sorted out so I wasn't taxed twice. Hence, the society which I benefited the most from got a big fat 0 of my salary. Reason has escaped the field of business.

Additionally, all countries I am aware of you tax liable where you are domicile. This may or may not be the country where you are based. Domicile is loosley defined as the country where you have the strongest family and economic ties. In my case it was a third country other than Ireland and the country where I was based. In the country I was based I was living under the radar, to avoid a third opinion of where I should pay tax. People that were based in Germany probably regrets that approach right now.

Lastly, an EU directive from 2012 has straightened out the coordination of social security in Europe. The "one size fits all" approach now makes it your responsibility as a contractor pilot, and Ryanair's responsibility for employees, to pay social security in the country where you are based. This may not be at all a good solution for you and personally I have lost money that I will never get back from this. But that's what the law says....

It is a Ryanair contract not with the broker. I was informed by Ryanair that according to Portuguese regulation you have to pay local tax on domestic sectors and it applies to all items of your salary. That is why I find it quite confusing. The biggest issue here is you expecting a certain take home pay and when you get your pay slip surprise it wasn´t even close.
In another exercise if you make lots of domestic flights/working days you achieve a scenario where you pay the lowest tax in Ireland and in Portugal, although at the end of the year you can find yourself paying a huge bill to the tax man.

Hi,

I'm going to start my training with the company soon and I've been running some numbers by my own. I don't know if these numbers are correct so please feel free to analyse them by your self and correct me.

Assuming:

- McGinley contract
- Paying taxes in Ireland (20% until 32800€ gross and 40% above that)
- Paying Social Security (SS) in Spain (Spanish base)
- Employee SS tax in Spain 6.35% and Employer SS tax 33.30%
- Second year at Ryan (800 hours in the company)
- Flying 800 hours in the second year

Let's say that we have no costs deducted, so all the gross income is taxable:

Gross income expected: 52.900€ (700 hours at 65.5€/sbh + 100 hours at 70.5€/sbh)
Taxes in Ireland (over gross): -14.600€
SS contribution (6.35%+33.30% over gross): -20.974,85€

Total net for the year: 17.325,15€
Average net per month (12 months): 1.443,76€

Is this correct?

What pilots are receiving is way more than that. Is this because they are not paying the SS Employer contribution?

Thats a well put together calculation, i date say you could up it nearer €2000 with reasonable expenses.

And yes not paying Employer SS is exactly what a lot of contractors don't do and I guess is 100% wrong and illegal. Its also the reason I jumped ship when I was forced onto one of these shady LTD company contracts when I did my upgrade.

It was a step to far.

All my own opinion of course and my thoughts have zero legal knowledge or basis. I am just a pilot.

Do you ask a tax accountant how to fly an a/c? Do you ask an a/c HR guy how to calculate international taxes?

Not really correct.

€52900 is your company's income, not your personal gross salary.

The company's income each month is supposed to cover the social contributions ( a percentage of your income) + a salary to you as an employee. That salary is variable depending on how much you fly and invoice McGinley for your services.

If your company invoices McGinley €4408 euros each month your gross income, called X, would be: X + 0,333X = 4408. I get it to: €3307.

€3307 is the basis for taxation in Ireland. I would guess that the employee social security is a percentage of that sum too. Where I come from their is no such thing as employee's social contributions. It's the employer only that is responsible for paying social contributions.

When you buy computers, pay hotels and food, mobile phone bills, new headset.. not to mention a Type Rating.. for your hard earned (at some point taxed) money you can claim that as a company expense. These expenses are something your company has to pay back to You as a private individual. In the beginning of your Ryanair career you can let your company, with its money, pay out these expenses to you instead of paying out any salary. You don't have to take out any salary at all, in which case you don't pay any tax or social security at all, and people talk about the famous "retention rate of 100 %". Naturally, the expenses will dry up eventually and you will be forced to pay social contributions and income taxes like any other company in the world. A good rule of thumb is; you end up with 50 % of your company's income in your pocket.

That's a statement with merit.

I just wanted to clear up the common confusion of gross salary, it's not the same as your company's income.

So 172 driver, with some expenses taken into account we are talking about 2000-2200€ average per month during the second year at the company (for contractor cadets).

If we say that actually only 11 months are paid (because of the unpaid holiday period) this is the same: 2180 - 2400€ per month (11 months) + 1 month unpaid.

It becomes obvious that the most favourable strategy is to remain based in Ireland where the employer SS is 0%, thus increasing by a 33% the income with respect to Spain.

Numbers are even worse in other countries where the SS taxes are higher and the cost of living is higher as well.

A friend of ours has recently been to see the accountant about change of tax residency from the U.K. to Spain; which any Ryanair pilot based in Spain ought to do as well. They were told that they will not be liable to pay further tax and social security in Spain if the amount of tax and NI they pay in U.K. exceeds what they would be liable for in Spain.

Assuming this is the precedent, your Ltd company pays employer social security and you pay tax and social security in Ireland. You would then need to see your Spanish accountant to ensure that your tax and social security contributions satisfy Spain's requirements.

It's worth noting that there is a bilateral agreement between Ireland and Spain for both tax and social security so you don't double pay either.

This whole Ltd contract carry on is very messy. Truth is no one on this forum really knows the answer as its so complicated. If you want to make Ryanair work longterm you really need to get yourself on to a direct contract with Ryanair ASAP from what I can see, although even then, if based in Spain, you would still need an accountant in Spain to register your tax residency and returns.

The type rating is easier than working all this out properly.

As previous post. Should really just be PAYE and your take home is just that. Anything wrong Mr Tax man from what ever country should just go see Ryanair and leave the pilot well alone to worry about things that need worrying about. Maybe flying a plane for example

Yep, that's why I'm worring about it now instead of doing it during my training and further life as a pilot.

BTW what are the requirements to get a direct Ryanair contract and get rid of all this messy scheme?

Those are similar to numbers I have heard from Germany, yes, where the tax authority has been very active to ensure things are done right.

My experience, although a few years out of date, was a take home in the region of €4000 per month spread over a year. One big reason for that however was I remained on grandfather rights paying Irish PRSI (Pay Related Social Insurance) of only 4 %.

The PRSI in the case of self-employed pilots is 4 % of reckonable earnings in Ireland, it's an employer's responsibility to pay (which in this case is your own company). There are different classes of SI and for normal employees I think it's a bit higher. There were talks about this in the past if Ryanair's self-employed pilots maybe should've been in a different class thus paying more. And also who should've paid, contractor or Ryanair. However, not sure if anything ever came out of that??

mackoy, you will get ride of a messy scheme but look at FlyHigher concerns...

As for getting a direct contract with Ryanais, try asking for one.

Probably I should wait for a couple of years at least before asking for a direct contract with Ryanair.

I have run some more numbers for your joy:

Evolution of average income per month (during each year) in an Spanish base under McGinley contract paying full SI in Spain (employee + employer) and taxes in Ireland. 800 hours per year are assumed

These are not real numbers, just my calculations and predictions and I am not an accountant. I though it would be a good idea to share my thoughs

Year| Company gross income| Accountable expenses|Net average income per month
1| 42.860,00 € | 20.000,00 € | 2.717,06 €
2| 52.900,00 € | 20.000,00 € | 3.178,39 €
3| 56.400,00 € | 2.000,00 € | 2.532,79 €
4| 70.400,00 € | 2.000,00 € | 3.001,03 €
5| 112.400,00 € | 2.000,00 € | 4.405,76 €
6| 112.400,00 € | 2.000,00 € | 4.405,76 €

During years 1 and 2 we have a significant ammount of expenses from the training period. The lowest income is during year 3 where the epenses are dry. At some point of year 4 a promotion to captain is expected and the income raises again and becomes stable from year 5 and on.

These numbers vary greatly from country to country.

That's a decent livable income provided you have no or minimal training costs to repay. You don't live at home and rent where you work. And you don't expect a Porsche until you make LTC/TRI and have money in the bank again.

Otherwise it's abismal for a Captain compared to what I make. Which is also a little sub par to some other companies.