CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Commission Rejects Amendment To Danish Tonnage Tax Regime

Commission Rejects Amendment To Danish Tonnage Tax Regime

by Ulrika Lomas, Tax-News.com, Brussels

18 June 2009


The European Commission has refused a change Denmark intended to make to its flat-rate tonnage-based tax scheme (tonnage tax) for shipping companies. The Danish authorities had proposed to exempt maritime companies which benefit from a tonnage tax regime from their obligation to systematically send fiscal authorities financial information relating to their transactions with any of their foreign affiliates.

The tonnage tax schemes enable shipping companies not to pay company tax, but only a flat-rate tax based on the tonnage of their fleet. Community law requires all tonnage tax schemes within the Community to contain ring-fencing measures aimed at avoiding possible abuses to ensure that these very favourable taxation schemes are not extended to activities other than maritime transport. The Commission has underlined that transactions between two affiliated companies, of which one can apply a favourable tax regime, should in particular follow the ‘arms-length’ principle. This principle ensures that profits are not unduly transferred to companies subject to the tonnage tax regime.

On the basis of its investigation, the Commission took the view that the proposed change could damage significantly one of the ring-fencing measures linked to the scheme, namely the monitoring of commercial transactions between companies subject to this scheme and their possible affiliates in other Member States or countries in the European Economic Area. The Commission also noted that Denmark failed to justify the difference of treatment between transactions with a Danish-taxed affiliate and those with a foreign-based affiliate.

The Commission therefore decided to consider the measure notified by Denmark as incompatible with the common market.


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »