Aircraft service provider Cityjet made a €627,000 settlement with the Revenue Commissioners concerning a tax dispute on the payroll tax status of non-Irish residents who work on board Cityjet aircraft, new accounts show.
The 2022 settlement by Cityjet DAC is disclosed in new accounts for the firm which show that pre-tax profits at Cityjet DAC increased almost 12-fold to €4.86m in 2022.
Cityjet DAC pre-tax profits increased sharply as revenues increased by 83% from €71.6m to €131.07m in 2022.
Concerning the €627,000 settlement with Revenue, a note discloses in respect of January 2015 to March 2020, CityJet was assessed by Revenue with a tax deficiency under section 127B of the Taxes Consolidation Act 1997.
The note states that the Revenue Commissioners claimed the section permits them to require Irish airlines to apply Irish payroll taxes to non-resident individuals who work on board the airline's aircraft even though those individuals pay payroll taxes in their home jurisdictions.
The note stated that CityJet DAC appealed this assessment in previous years before the Tax Appeals Commission as the company and its advisors were of the opinion that the assessment is not valid.
Concerning the €627,00 exceptional cost, they state that in 2022, a final agreement was reached between CityJet DAC and the Irish Revenue Commissioners.
In 2022, Cityjet operated a fleet of 22 CRJ900 aircraft, the majority under a wet lease contract for SAS Scandinavian Airlines, with aircraft and crews based in Copenhagen and Stockholm and the company has expanded since then.
The group's principal activities include ACMI (aircraft, crew, maintenance and insurance) or wet lease contract flying and since 2018, Cityjet flights have all been operated on behalf of customer airlines - Cityjet does not fly scheduled flights under its own brand.
The directors state that the group's total revenues increased by 83% in 2022 "mainly as a result of easing of air travel restrictions".
Numbers employed increased from 453 to 582 as staff costs almost doubled from €25.2m to €45.5m.
The company's aircraft rental bill totalled €24.8m as aircraft maintenance, materials and repairs amounted to €38.9m.
A breakdown of revenues shows that €20.63m was generated in Ireland with €110.4m generated in Sweden.
The directors state that in 2023, the group's shareholders entered into an agreement with Air Investment Valencia SL to effect a scheme of amalgamation.
They state that they expect this "to bring about synergies and cost savings mainly on aircraft maintenance costs in the foreseeable future".
Expanding the business, the directors state that in February 2023, CityJet signed operating leases for five CRJ 1000 aircraft for a lease period of three years.
The first aircraft was introduced in March 2023 and the remaining aircraft were expected to be added to the company's fleet by August 2023.
In a further expansion of business, the directors also state that in March 2023, the company signed ACMI lease contracts with two new airline customers for four lines of flying for Summer 2023.
The directors state that they expect that these contracts, together with the existing ACMI lease contracts with the company's key airline customer will be extended for the foreseeable future.
They state that discussions are on-going with these airline customers in respect of the extension of their ACMI lease contracts.
Reporting by Gordon Deegan
