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EC: Greece Should Better Target Tonnage Tax

by Ulrika Lomas,, Brussels

22 December 2015

The European Commission has said that Greece's tonnage tax may breach European Union state aid rules by allowing shareholders of shipping companies to benefit from favorable tax treatment.

The Commission has sent to Greece a set of proposals to ensure that state support for the maritime sector complies with EU state aid rules. Under EU Maritime Guidelines, member states can tax shipping companies on the basis of the tonnage of the fleet rather than the profits of the company. The Commission said that in order to avoid subsidy races between member states and to limit distortions of competition, these provisions must be applied consistently throughout the EU and comply with the conditions set out in the Guidelines.

The Commission said it is concerned that the Greek tonnage tax system is not well targeted and may provide shareholders of shipping companies with advantages that should be reserved for maritime transport providers. It has asked Greece to review which vessels are eligible under its system and to exclude fishing vessels, port tugboats, and yachts rented out to tourists without a crew. According to the Commission, operators of such vessels should in future be subject to the standard income tax.

The Commission would also like Greece to abolish preferential tax treatment for insurance intermediaries, maritime brokers and other intermediaries, and shareholders of shipping companies.

Greece has two months to inform the Commission whether it agrees to the measures proposed. If it acquiesces, Greece would need to amend its national rules with effect from January 1, 2019, at the latest. The Commission may otherwise launch a formal state aid investigation.

TAGS: tonnage tax | compliance | tax | marine | European Commission | tax compliance | tax incentives | insurance | tax authority | Greece | tax breaks | tax reform | European Union (EU) | Europe

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