Airline pilots taxed where they work or where they life?

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Airline pilots are subject to taxation over their income as well, but how and where are they taxed? They fly over so many countries, is their activity assumed an activity in that specific country they fly over or have simple rules been issued.

Where is an Airline pilot taxed?

That depends on certain factors. Some rules are based on the place of tax residence of the pilot, some rules are based on the central point of management of the airline company.

In the tax treaties between the countries the Netherlands have ruled that employment is taxed in the Netherlands, when the job is actually being done in the Netherlands. When the job is actually done in two countries, then a so called split payroll is applicable.

An exception to this rule is the so called 183 day rule. In our office we refer to this rule as the 183 day rule plus two more conditions nobody takes into account, which often make the 183 day rule cannot be applied.

The employment article in Dutch tax treaties is always ended with crew on a ship or airplane are only taxed in the country where the company is being exploited from. In other words, where the head office or the office that is giving you instructions, pays you your salary is situated.

That said, other countries, like Luxemburg, have other rules in their tax treaties. They state that the pilot is taxed in the country where they have their tax residence. If you put in perspective the much lower tax rates in Luxemburg compared to the Netherlands and this different ruling, you can imagine how unpleasantly surprised airline pilots are when they start working in the Netherlands.

Fortunately for some we have the so called 30% ruling, which softens the tax blow for 30% of the income.

Where is a creative airline pilot taxed?

One of our dear clients who flies for a well-known Dutch airline company was creative in his fiscal actions. He moved to Malta, while his command was in Amsterdam. How do you do that? Simple, you hop on a plane in the morning, arrive in Amsterdam, start your job and a couple of days later you are back in Malta. Fringe airline benefits.

Airline pilots taxed

If you read the above correctly, moving to Malta should not make a difference in taxation, as the command of the airline company has not moved to Malta. The exception to that rule is when the country to where the pilot moved his residence taxes the pilot based on his residence and not where the command post of the airline is based.

When that is the case, we can make a request with the tax office to move the tax part of the employment to Malta, if it can be proven the employee actually pays tax on Malta. That is for the tax part only, not for the social premium part. This makes this client one of the view Airline pilots of which is collected only EUR 9.490 (2016) tax which equals the full year social premium amount.

Orange Tax Services

We can offer airline companies the service of a fully managed payroll, even globally when pilots live around the globe or your airline company has command posts around the globe. We can even assist with the application of the so called 30% ruling at a fixed fee and we can assist making the claim of no wage tax being withheld for the airline pilot actually living abroad. Contact our team for assistance.