The High Court has refused Ryanair’s application to temporarily prevent the use of section 127B of the Taxes Consolidation Act 1997 while the airline challenges the provision under EU law. The court also declined to refer questions to the Court of Justice of the European Union at this interlocutory stage, saying a reference would be premature.
Section 127B requires Irish-managed airlines to deduct Irish income tax from pay earned by aircrew on international flights. Ryanair argued that the provision was incompatible with EU law and sought interim orders pending the determination of its case. It did not pursue an interim order exempting it from the provision, and no constitutional argument was advanced at the hearing.
The judgment found Ryanair had shown an arguable case that the section could infringe its freedom of establishment under Article 49 of the Treaty on the Functioning of the European Union. Ryanair said the tax rule, combined with local employment and tax arrangements being introduced for aircrew, could make it commercially necessary to move its effective management outside Ireland. The court did not decide whether the section breaches EU law.
The judge found the evidence insufficient at this stage to support Ryanair’s claims that the tax treatment financially disadvantaged aircrew or infringed their EU rights. The application relied on tax comparisons across several countries, but the court identified gaps including a lack of expert evidence on other countries’ tax rules and the effect of double taxation agreements. The court did find it arguable, for the interim application, that Ryanair had standing to raise claims based on its employees’ rights.
In refusing the injunction, the court gave weight to the fact that section 127B is an existing tax measure in force since 2011 and to uncertainty about whether aircrew would be required to pay tax locally if Irish deductions stopped. Ryanair’s possible financial losses, including additional tax or relocation costs, were considered capable of being addressed through damages. The court concluded that the balance favoured maintaining the status quo.
The court said a later EU reference might be necessary to resolve new questions of general interest, but the case needed a fuller factual record and both sides’ arguments first. It dismissed the interlocutory applications and expressed hope that the parties, aircrew representatives and relevant states would also pursue discussions.