Ryanair denies Italian tax probe claim

DUBLIN Wed Oct 17, 2012 12:58pm EDT

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DUBLIN Oct 17 (Reuters) - Ryanair has rejected a claim made in Italy that it dodged around 12 million euros ($15.5 million) of social security payments, saying on Wednesday that it was fully complicit with Irish and European Union tax laws.

Prosecutors in the northern Italian city of Bergamo, where Ryanair-operated airport Orio al Serio is based, allege the Irish carrier avoided heavier taxation in Italy by paying lower pension fees in Ireland for staff flying in and out of Bergamo.

A judicial source with direct knowledge of the investigation told Reuters that Ryanair's chief executive Michael O'Leary had been under investigation since June 2010 as the legal representative of the group.

The criminal case is part of a wider fiscal offensive led by Italian state pension fund INPS against Ryanair, which has often been accused by domestic rivals of unfair competitive practices.

Europe's biggest budget airline said on Wednesday that its workers were covered by EU regulations applicable to mobile transport workers in respect of their employment, which takes place on Irish registered aircraft.

It said pilots and cabin crew therefore worked in Ireland and not in Italy, and pay their taxes and social taxes in Ireland under these regulations.

"The claims of 'social tax avoidance' made by the Bergamo prosecutor's office are untrue and will be vigorously defended," company 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."

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