EU Okays Maritime Transport Support Schemes in 5 Countries (17 DEC 2019)

The European Commission has approved five schemes to support maritime transport in Cyprus, Denmark, Estonia, Poland and Sweden.

As explained, the schemes encourage ship registration in Europe and contribute to the global competitiveness of the sector without unduly distorting competition.

Specifically, the commission decided to introduce a tonnage tax and seafarer scheme in Estonia, prolong a tonnage tax and seafarer scheme in Cyprus by ten years, introduce a new seafarer scheme in Poland, prolong and extend a seafarer scheme in Denmark, and prolong a seafarer scheme in Sweden.

Under the tonnage tax measure, shipping companies can apply to be taxed based on a notional profit or the tonnage they operate, instead of being taxed under the normal corporate tax system. This can reduce the overall level of taxes paid and increase their predictability for the companies. Under seafarer schemes, labor costs for seafarers employed on board vessels flying the flag of EU or European Economic Area (EEA) Member State may be partly or totally reduced.

As regards the tonnage tax schemes in Estonia and Cyprus, the European Commission found that the schemes comply with the rules limiting tonnage taxation to eligible activities and vessels. Furthermore, as regards taxation of dividends of shareholders, the commission found that both the Estonian and the Cypriot tonnage tax schemes ensure that shareholders in shipping companies are treated in the same way as shareholders in any other sector.

In addition, regarding the seafarer schemes in Estonia, Cyprus, Poland, Denmark and Sweden, the commission found that all five Member States have agreed to apply the benefits of their respective scheme to all vessels flying the flag of any EU or EEA Member State.

“The commission concluded that the schemes are in line with EU State aid rules, as they will contribute to the competitiveness of the EU maritime transport sector and encourage ship registration in Europe, while at the same time preserving Europe’s high social, environmental and safety standards and ensuring a level playing field,” the EC said in a statement.

“To be recognised by the European Commission for our fair and transparent tonnage tax system, which has already been applicable for ten years and is now extended for another ten years, demonstrates our commitment to the sustainable growth of European shipping and enables us to continue with our strategy for the sustainable growth of the sector in Cyprus and in Europe,” Natasa Pilides, Cyprus Shipping Deputy Minister, commented in a separate statement.

“We are confident this prolonged system will assist in increasing the tonnage of our fleet as well as the breadth and sophistication of our cluster,” Pilides added.