10 Nov 2013

EU resists changes to tonnage tax


Tonnage tax alert email

Following a recent review, the European Commission has decided not to revise its Maritime State Aid Guidelines in the near future. This decision follows the European Commission "Consultation on review of the Community guidelines on state aid to maritime transport" that was launched in February 2012.

This is good news for the shipping industry in general as it supports the current tonnage tax system as operated in many EU countries, including the UK.

There had been pressure on the Commission to tighten the guidelines, in particular in relation to the citizenship of seafarers working on ships operated by tonnage tax companies and to increase the training commitment. There was also concern that certain specialist ships, such as tugboats, dredgers and pipeline layers may be excluded. There are some areas of the guidelines that require further clarification and the Commission will continue to pursue individual cases raised with individual member states. However, this decision indicates that the Commission has decided not to make major changes to the guidelines themselves.

The UK tonnage tax system provides an attractive low tax regime, encouraging shipping companies and groups to base their shipping operations in the UK. The regime is more flexible than is often thought so, for example, the EU Flagging requirement can often be avoided and ship ownership can remain offshore as long as the bareboat to time-charter ratio is no less than 25:75.

We have attached a summary of UK tonnage tax prepared by Stephenson Harwood and published by Westlaw UK.

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