Eurowings and Lufthansa Group to establish Maltese company

Eurowings and the Lufthansa Group have decided to establish the Maltese company Eurowings Europe Ltd. in March 2022 and to apply for an Air Operator Certificate in the country, Eurowings told the newsroom.

Eurowings is a Lufthansa subsidiary. Its website reads that it is the Lufthansa Group’s budget airline, specialising in direct flights within Europe. According to its website, the airline currently offers a total of more than 100 destinations in over 50 countries worldwide. Eurowings does not have any operations in Malta.

The intention is to successively transfer aircraft and crews from Eurowings Europe GmbH to the new company in the course of the winter flight schedule 2022/23, Eurowings said, in response to questions sent by this newsroom. “The aim of this is to eliminate the complexity for employees within Europe, which is driven by the current double taxation, and to enable further growth.”

The airline was asked whether this will require a base or staff in Malta and if it will be expanding its presence on the island.

“The new company will be based in Malta with administrative functions and those required by air law and will operate under a Maltese Air Operator’s Certificate. This will include on-site staff with office space and a place of business with approximately 10 employees. The crews will continue to operate pan-European across the established Eurowings Europe bases.”

Clarifying its position, Eurowings said that it is not planning to base any crew members in Malta. “The decision to establish a company in Malta was made independently of the flight program offered by Eurowings in Europe. At the moment there are no plans on starting or increasing flights to Malta.”

Providing further details about the changes for the company, it said: “The complex double taxation in Austria has been a disadvantage for Eurowings Europe crews for years. Currently, regardless of the individual’s place of residence and country of employment, most of the wage taxation falls to the country in which the airline’s legal domicile is located – in our case, Austria. However, the majority of our Eurowings Europe employees live in Spain, the Czech Republic, Sweden, etc. The problem of double tax returns and complex accounting processes would increase with each new base opening (Prague, Stockholm, etc.). Eurowings Europe must eliminate these disadvantages in competition (also in recruiting).” “A legal domicile in Malta makes it possible for tax and social security contributions of employees to be paid in full in the respective country of employment – i.e., Spain, the Czech Republic, Sweden, etc. It is therefore explicitly not about tax avoidance, but about taxation in the respective country of employment