EC questions whether Greek tonnage tax amounts to state aid

EC questions whether Greek tonnage tax amounts to state aid

The European Commission has sent to Greece a set of proposals to ensure that state support to the maritime sector in Greece complies with EU state aid rules.

In particular, the commission found that current provisions may breach EU state aid rules by allowing shareholders of shipping companies to benefit from favourable tax treatment that should be reserved for maritime transport providers. Similarly, the commission said it is concerned that favourable tax treatment is also extended to maritime sector intermediaries and operators of ships, which do not provide maritime transport services.

“The Commission has concerns that the Greek tonnage tax system is not well targeted and benefits the shareholders of shipping companies as well as companies other than maritime shipping companies, beyond what is permitted under the Maritime Guidelines,” the organisation said in a release yesterday.

The commission has therefore asked Greece to review which vessels are eligible under its system and exclude fishing vessels, port tugboats, as well as yachts rented out to tourists without a crew from the preferential regime. Operators of such vessels should in future be subject to the standard income tax.

Preferential tax treatment should also be removed for insurance intermediaries, maritime brokers and other maritime intermediaries as well as the shareholders of shipping companies – none of which conduct genuine maritime transport activities.

The commission’s requests do not concern the core of the Greek shipping economy, notably the operation of bulk carrier and tanker vessels. These can continue to benefit from a tonnage-based taxation instead of profit-based taxation as long as operators of such vessels maintain the share of the fleet they have under EU or European Economic Area flags.

Greece now has two months to inform the commission whether it agrees to the measures proposed, in which case it would need to amend its national rules with effect from 1 January 2019 at the latest.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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