KLM must do its best to prevent the company from cooperating in tax avoidance by pilots and cabin crew living outside the Netherlands. State agent at KLM Jeroen Kremers will discuss this with the airline, ministers Sigrid Kaag (Finance) and Mark Harbers (Infrastructure) report to the House of Representatives.
Since the start of the corona crisis, KLM has received a total of 6.5 billion euros in aid. That equates to 240,000 euros per employee. In other words, in the words of the government itself: ‘very extensive’ support. As a state agent at KLM, Jeroen Kremers is tasked with reporting whether the airline has complied with the rules for corona support. One of the conditions is KLM’s commitment that ‘possible cooperation or facilitation of tax avoidance by employees will be terminated’.
The latest government progress report shows that 11 percent of pilots and 5 percent of cabin crew live outside the Netherlands. That is approximately 680 employees in total. Most pilots live in Spain, Belgium is the favorite for cabin crew. news hour reported nearly two years ago that some of them would do so on the advice of tax advisers. The arrangement for their travel allowance makes it easy to live abroad for tax reasons.
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Kremers notes that not all of these people live abroad for tax reasons, but also because of family ties or the weather, for example. Still, he estimates that about two-thirds live in a country where they pay less tax. All those employees can use KLM group flights for free for commuting. According to the state agent, the arrangement whereby the pilots receive compensation for their international travel costs makes it easier to avoid tax in the Netherlands by living abroad.
Stricter rules of conduct
According to Kremers, it is impossible to check why everyone lives abroad. He does say, however, that he is looking with KLM to see whether ‘generic initiatives are possible to put an end to any facilitation’. He is thinking of a maximum of the travel allowance, equal to the travel allowance for employees who live in the Netherlands. Or to stricter rules of conduct.
The House of Representatives wanted KLM to act against this type of tax avoidance as a condition for the support the company received in the corona crisis. KLM itself has informed the state agent that this condition has been met because only a small number of employees live abroad, and that it is also not illegal. Kremers therefore disagrees.
Furthermore, according to Kremers, KLM adheres reasonably well to the conditions. According to him, the ‘economic and financial conditions’ such as cost savings are ‘largely met’, although it is now important to look ahead to a possibly uncertain future. In the field of sustainability and nuisance, the company will also be dependent on extra steps that the Ministry of Infrastructure and Water Management itself must take.
KLM confirms that it is in talks with the state agent. The airline does not want to say anything more about it, a spokeswoman said.
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