diff --git a/src/app/Observers/UserAliasObserver.php b/src/app/Observers/UserAliasObserver.php
--- a/src/app/Observers/UserAliasObserver.php
+++ b/src/app/Observers/UserAliasObserver.php
@@ -21,17 +21,22 @@
     {
         $alias->alias = \strtolower($alias->alias);
 
-        if ($exists = User::emailExists($alias->alias, true, $alias_exists)) {
+        list($login, $domain) = explode('@', $alias->alias);
+
+        $domain = Domain::where('namespace', $domain)->first();
+
+        if (!$domain) {
+            \Log::error("Failed creating alias {$alias->alias}. Domain does not exist.");
+            return false;
+        }
+/*
+        if ($exists = User::emailExists($alias->alias, true, $alias_exists, !$domain->isPublic())) {
             if (!$alias_exists) {
                 \Log::error("Failed creating alias {$alias->alias}. Email address exists.");
                 return false;
             }
 
-            list($login, $domain) = explode('@', $alias->alias);
-
-            $domain = Domain::where('namespace', $domain)->first();
-
-            if (!$domain || $domain->isPublic()) {
+            if ($domain->isPublic()) {
                 \Log::error("Failed creating alias {$alias->alias}. Alias exists in public domain.");
                 return false;
             }
@@ -41,7 +46,7 @@
                 return false;
             }
         }
-
+*/
         return true;
     }
 
diff --git a/src/tests/Feature/Controller/UsersTest.php b/src/tests/Feature/Controller/UsersTest.php
--- a/src/tests/Feature/Controller/UsersTest.php
+++ b/src/tests/Feature/Controller/UsersTest.php
@@ -418,6 +418,8 @@
     {
         $jack = $this->getTestUser('jack@kolab.org');
         $john = $this->getTestUser('john@kolab.org');
+        $deleted_priv = $this->getTestUser('deleted@kolab.org');
+        $deleted_priv->delete();
 
         // Test empty request
         $response = $this->actingAs($john)->post("/api/v4/users", []);
@@ -481,7 +483,7 @@
             'last_name' => 'Doe2',
             'email' => 'john2.doe2@kolab.org',
             'organization' => 'TestOrg',
-            'aliases' => ['useralias1@kolab.org', 'useralias2@kolab.org'],
+            'aliases' => ['useralias1@kolab.org', 'deleted@kolab.org'],
         ];
 
         // Missing package
@@ -523,8 +525,8 @@
         $this->assertSame('TestOrg', $user->getSetting('organization'));
         $aliases = $user->aliases()->orderBy('alias')->get();
         $this->assertCount(2, $aliases);
-        $this->assertSame('useralias1@kolab.org', $aliases[0]->alias);
-        $this->assertSame('useralias2@kolab.org', $aliases[1]->alias);
+        $this->assertSame('deleted@kolab.org', $aliases[0]->alias);
+        $this->assertSame('useralias1@kolab.org', $aliases[1]->alias);
         // Assert the new user entitlements
         $this->assertUserEntitlements($user, ['groupware', 'mailbox', 'storage', 'storage']);
         // Assert the wallet to which the new user should be assigned to