EC Questions UK Seafarers' Tax Concession

by Ulrika Lomas, Tax-News.com, Brussels

25 June 2010

The European Commission has requested the United Kingdom to change its income tax provisions which allow a tax deduction for the earnings of seafarers who are resident in the UK.

In its request to the UK government, the Commission said it considers the rules to be discriminatory and to constitute a restriction on the free movement of people, in breach of the UK's obligations under EU law.

The Commission's request to the UK takes the form of a reasoned opinion under EU infringement procedures. In the absence of a satisfactory response within two months, the Commission may refer the UK to the European Court of Justice.

The tax deduction in question is equal to the amount of taxable income for the period during which seafarers have worked in the UK - i.e. it is essentially an exemption of the relevant earnings. In the Commission's view, such a deduction is an objective element of taxation (it is not related to the taxpayer's personal and family situation) and should be granted equally to resident taxpayers and non-resident taxpayers exercising their right to the free movement of workers within the EU.

Recommended