TAX ALLEGATIONS

Ryanair Offices Raided in Germany

ARCHIV - A file picture dated 10 May 2007 shows Ryanair planes at Dublin airport in Dublin, Ireland. EPA/ANDY RAIN (Zu dpa "Ryanair will neue Flugzeuge außerhalb Großbritanniens stationieren" vom 28.06.2016) +++(c) dpa - Bildfunk+++
Ryanair in the crosshairs of German tax authorities.
  • Why it matters

    Why it matters

    The raids could cast a negative light on Ryanair as it attempts to expand in Germany.

  • Facts

    Facts

    • At least 35 customs officials raided Ryanair offices at six German airports: Berlin-Schönefeld, Cologne, Weeze near Düsseldorf, Frankfurt-Hahn, Bremen and Baden-Baden.
    • Investigators asked pilots about their working conditions and seized computers, iPads, work schedules and documents.
    • At least two apartments belonging to pilots were also searched. The pilots are reportedly suspected of aiding and abetting tax evasion and social insurance fraud.
  • Audio

    Audio

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German authorities have searched the offices of budget airline Ryanair at six different airports across the country to investigate allegations of tax evasion and social insurance fraud.

The state’s attorney from the city of Koblenz and customs authorities intercepted pilots and crew members who may have been working under the table, according to a report by Zeit Online, a German news site.

At least 35 customs officials participated in the raids at the airports Berlin-Schönefeld, Cologne, Weeze near Düsseldorf, Frankfurt-Hahn, Bremen and Baden-Baden.

The investigators asked pilots about their working conditions and seized computers, iPads, work schedules and documents.

Two British employment agencies are at the center of the investigation, the Koblenz state’s attorney told Zeit Online. They are accused of tax evasion and withholding pilots’ wages.

“The German tax authorities are not investigating Ryanair, which requires all its pilots and contractors to comply with their tax requirements”

Robin Kiely, Head of Ryanair Communications

At least two apartments belonging to pilots were also searched. The pilots are reportedly suspected of aiding and abetting tax evasion and social insurance fraud.

Ryanair met with the German tax authorities and agreed to support them in their inquiries into some contract pilots, Ryanair’s head of communications Robin Kiely confirmed in a statement.

The German tax authorities are not investigating Ryanair, which requires all its pilots and contractors to comply with their tax requirements, the statement said, adding that if Germany’s tax authorities need further support, Ryanair is happy to offer this.

Ryanair is Europe’s largest budget airline and one of the world’s most profitable. As of March, its revenue had climbed 16 percent to €6.54 billion and its profits had increased 43 percent to €1.24 billion.

The Irish budget carrier has launched a major expansion in Germany, aiming to boost its market share from 4 percent to 20 percent and replace Air Berlin as the number two airline behind Lufthansa.

Responding to increased demand, Ryanair plans to launch 15 new routes from Berlin-Schönefeld airport in September of 2016.

In June, Ryanair tickets from Cologne to Milan Bergamo airport were selling for a low as €9.99 or $11.19. But critics accuse the budget carrier of creating low ticket prices on the backs of its pilots and crew members.

Many Ryanair pilots are self-employed and contract themselves through agencies such as Brookfield Aviation and McGinley.

First officers also are often contractors. According to a contract obtained by the German weekly Die Zeit, Handelsblatt’s sister publication, some first officers made a basic salary of less than €21,000 in 2014.

Ryanair Chief Executive Michael O’Leary told Die Zeit in a May exclusive that first officers make between €65,000 and €75,000 on average.

A Brookfield Aviation document obtained by Die Zeit said pilots are paid per hour of flight time. There have also been allegations that pilots don’t receive guaranteed sick pay, a charge Ryanair has categorically denied.

Mr. O’Leary told Die Zeit that all employed pilots and contractors receive sick pay equivalent to 50 percent of their maximum hours for the month. Pilots, he said, earn €150,000 per year for flying less than 900 hours.

There have also been allegations that some flight attendants receive less than €1,500 a month before tax. Mr. O’Leary said they make more than €25,000 a year on average.

 

Spencer Kimball is a Handelsblatt Global Edition editor based in Chicago. Allison Williams of Handelsblatt Global Edition in Berlin also contributed to this story. To contact the author: williams@handelsblatt.com 

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