Ryanair Investigated For Evading Italian National Insurance

Prosecutors say contributions are paid in Dublin while employees take advantage of INPS-funded healthcare

BERGAMO – Mister Ryanair is in trouble with the law. The Bergamo public prosecutor’s office has entered the names of airline CEO Michael O’Leary and his director of legal affairs Juliusz Komorek in the register of individuals under investigation. Prosecutor Maria Mocciaro alleges failure to pay national insurance contributions for 220 employees hired in Dublin but based at Orio al Serio by applying Irish taxation, which is much lower than Italy’s. According to the Bergamo provincial employment directorate (DPL), the loss to the Italian public purse is of the order of €12 million. Inspectors believe this figure, based on a list of names furnished by Ryanair, is an underestimate. According to the border police database, some 900 Ryanair employees passed through Bergamo airport from 2003 to 2010. This means that the total evaded could be much higher, although part can no longer be collected because a time-bar will come into force.

The Italian legal system’s spotlight is now turning on the giant Irish low-cost carrier following the Bergamo DPL’s report in late 2011 to INPS, the social security institute, on alleged irregularities in Ryanair employees’ status. The Dublin-based airline, which has always maintained that it is under no obligation to pay Italian taxes as it has no permanent service organisation in Italy, had 90 days to correct its position. Payment of contributions in arrears would have annulled the offence. No payment was forthcoming as Ryanair is convinced it is right. Mr O’Leary maintains that his crews operate on board Irish aircraft and do not undertake any working activities in Italy: no Italian contributions are due.

The public prosecutor’s office takes a different view. Other non-domestic airlines with a presence in Italy, such as Lufthansa and Air France Italia, hire workers under Italian regulations. Ryanair contracts, however, are signed in Dublin, where taxation on wages is an average of 12% against the Italian figure of 37%.

In practice, Ryanair employees are hired under Irish law but work in Italy, where they live – one of the requirements for employment is residence less one hour away from the airport – and where they, along with their families, benefit from healthcare services. This is the point that prosecutors are looking to investigate. For the time being, the question has not been included in the case file but Bergamo-based financial police are carrying out exploratory inquiries. Ryanair workers would apply to INPS for an A1 form, a certificate entitling them to healthcare. The A1 form enables a Ryanair worker requiring healthcare abroad to obtain it without paying.

But the care is not free. The bill is sent subsequently to the country that granted the healthcare insurance certificate, in this case Italy. Prosecutors maintain that in addition to paying its taxes in Dublin, Ryanair unlawfully passed its healthcare costs onto the Italian healthcare system. Was the company aware of this? According to the inspectors, the answer is yes because the INPS certificate has to be sent to Ryanair’s personnel office. It remains to be seen why some INPS offices were issuing the certificates improperly for years. By the time the anomaly came to light, more than 800 certificates had already been handed out. At the expense of Italy’s unwitting taxpayers.

English translation by Giles Watson

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