Low-cost carrier Ryanair is in hot water after chief executive Michael O’Leary and legal affairs director Juliusz Komorek are expected to be charged with tax evasion in Italy.
State prosecutors in Bergamo, northern Italy, where Ryanair operates out of Orio al Serio airport, have issued an investigation into the airline for allegedly avoiding EUR12m (US $15.7m) in social security payments since June 2010.
The Irish airline is suspected of treating 220 staff recruited in Bergamo as Irish employees, thus allowing them to pay a rate of 12 per cent in social security contributions instead of the rate of 37 per cent that is standard in Italy.
Although many of the 220 employees live in Italy, it is expected the airline will argue they were treated as Irish employees because they work on an Irish-registered aircraft.
“The claims of ‘social tax avoidance’ made by the Bergamo prosecutor’s office are untrue and will be vigorously defended,” Ryanair spokesman Stephen McNamara said in a statement.
“Similar actions against Ryanair in Belgium, Germany and Spain have been all unsuccessful with the courts ruling that Irish jurisdiction applied to Ryanair and its crews,” he added.
According to new EU rules approved earlier this year, pilots, stewards and hostesses will pay taxes where their “home base” is. Airlines will have 10 years to comply with these new rules.