EC Approves Modifications To Dutch Tonnage Tax System

by Ulrika Lomas, for LawAndTax-News.com, Brussels

11 March 2009

The European Commission has announced that it has decided to authorise modifications to the Dutch tonnage tax regime that enables shipping companies not to pay corporation tax, but rather to just pay a flat-rate tax based on the tonnage of their fleet.

The Dutch tonnage tax scheme was initially approved by the Commission in 1996 and then brought into line with the current Guidelines on state aid to maritime transport.

In 2008, the Dutch authorities notified their intention to introduce two changes in the tonnage tax scheme - the first relating to large vessels exceeding 50,000 net tonnes, for which they propose to apply a much lower tax base of EUR0.5 (GBP0.46) per day per 1,000 net tonnes, and the second concerning ship management companies, for which the Dutch authorities propose to lower the tonnage tax base by 75%.

The planned reduction aims to offset the lack of incentives for such companies to develop their activities in the Community.

Today, they have to pay a much higher percentage of their profits as tonnage tax than ship-owners. At the same time, externalizing ship management is a global trend which significantly increases efficiency and competitiveness.

The Commission considers that both amendments are compatible with the common market and can contribute to the Community's interests in the field of maritime policy.

The amendments may be applied retroactively from January 1, 2009.

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