CityJet, an aircraft service provider, has reached a €627,000 settlement with the Irish Revenue Commissioners over a tax dispute related to the payroll tax status of non-Irish residents working on the airline’s aircraft. The settlement, disclosed in the company’s 2022 accounts, pertains to an assessment made by the Revenue Commissioners concerning tax deficiencies from January 2015 to March 2020.
CityJet DAC’s pre-tax profits surged almost 12-fold in 2022, rising to €4.86 million from €414,000 in 2021. The growth in profits was driven by an 83% increase in revenues, which climbed from €71.6 million to €131.07 million.
The tax dispute arose when the Revenue Commissioners assessed CityJet for a payroll tax deficiency under Section 127B of the Taxes Consolidation Act 1997. This section mandates that Irish airlines apply Irish payroll taxes to non-resident individuals working aboard their aircraft, even if these individuals pay taxes in their home countries. CityJet appealed the assessment, arguing that it was invalid. However, a final agreement was reached in 2022, resulting in the €627,000 settlement.
CityJet, which operates a fleet of 22 CRJ900 aircraft, primarily under wet lease contracts for SAS Scandinavian Airlines, has experienced significant growth in recent years. The company, which no longer operates scheduled flights under its own brand, has expanded its operations since 2018, focusing on ACMI (aircraft, crew, maintenance, and insurance) lease contracts.
In 2022, the company saw an increase in the number of employees, from 453 to 582, and its staff costs nearly doubled, rising from €25.2 million to €45.5 million. The airline’s aircraft rental costs totaled €24.8 million, while maintenance expenses amounted to €38.9 million.
CityJet’s 2022 revenue breakdown shows €20.63 million generated in Ireland and €110.4 million from Sweden. The company attributed the significant revenue growth to the easing of air travel restrictions following the pandemic.
Looking forward, CityJet plans further expansion. In February 2023, the airline signed operating leases for five CRJ 1000 aircraft for a three-year period, with the first aircraft joining the fleet in March 2023. Additionally, the company secured new ACMI lease contracts for four lines of flying for Summer 2023.
CityJet’s directors expect these new contracts, along with the extension of existing ACMI lease agreements with key airline customers, to provide continued growth and cost savings, particularly in aircraft maintenance. The company has also entered into an agreement with Air Investment Valencia SL for a scheme of amalgamation that is expected to yield synergies in the future.
