Easyjet crews and Revised taxes in Germany?
 

The gossip running around our crew room today was that the Easyjet crews in Germany now face local taxes, and the worst part is that its going to be post dated to the beginning of the year!

Can anyone else enlighten us as to the truth?

Is this the end of the road for the creative accounting that some of us have been able to benefit from?

What's your problem?

Living in Germany and paying Cayman Islands taxes?

I thought that everyone knew. Not only EJ crews, but all pilots operating from a German base have to pay German taxes. The only exception to my knowledge is PTI, they found a very fair deal with the authorities, fighting with the argument that although they are based in Germany, they never fly over it (but over the Atlantic). Still they pay 50% of German taxes (if they do not live there).

For most pilots this problem started already last year I thought...

Dani

No problem Hetfield,
I face a different set of issues I have been home for 10 days in the last 3 months so taxes are the least of my worries! Its the wife and kids I am scared of not the Finanzamt:ok:

The new rules are true but should be no surprise for the people concerned!
As Non-residents in the UK the HMRC charges only taxes on the UK-part
of the income, which means domestic flights or a fixed 15min on each
flight to/from the UK.

The rest of income was therefore not taxed due Non-Residence status.
Germany in turn waived to tax the remaining part of income. Fine.
And exactly that "loophole" is now closed. But: No real surprise, errr ? :E

The untaxed part is to be taxed in Germany now and this means all german
crews get about the same (net) salary as the colleagues in the UK
(actual tax rates are very similar)
According the rule: "One company, one (net) pay!" :}

It was only a matter of time........

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

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

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

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

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

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

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

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

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

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

I guess, the attrition rate will go up again!

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

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

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

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

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

Once again, read the question above.

So let's expand on that for a bit.

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

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

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

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

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

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

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

Hey rubik101,

Do you work for the IR in your spare time?

:ok:

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

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

Far easier to pay as you earn, believe me.

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

Some thoughts.

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

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

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

Pessimistic, perhaps.

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

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


Regards

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

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

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

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

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

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

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

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

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

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

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

law changed in Jan 2007
 

Any info on were to find that changed law?

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

I doubt it.

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

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

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

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

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

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

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

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

D'oh!

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

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

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

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

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

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

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

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

Simple enough, isn't it?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


:ok::ok::E

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

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

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

GET YOUR HAND IN YOUR POCKET AND PAY YOUR CONTRIBUTION!

My take on this is the following:

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

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

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

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

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

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

Absolutly 100% correct Saaby!

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

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

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

Roll on the 1% strike I say:}

My point exactly Int Hog Driver!

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

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

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

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

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

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

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

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

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