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EFTA Approves Expansion Of Norwegian Maritime Tax Refund Scheme

by Ulrika Lomas, Tax-News.com, Brussels

18 September 2017


The European Free Trade Association (EFTA) Surveillance Authority has approved under the bloc's state aid rules an amendment to a Norwegian tax scheme granting tax and social security contributions refunds to shipping companies.

Under the scheme, approved by the authority on September 14, shipping companies are granted refunds of taxes and social security contributions paid for European Economic Area (EEA) seafarers on ships registered in Norway. The scheme is intended to encourage shipping companies to recruit seafarers from Norway or other EEA states, which include European Union member states and the three EEA EFTA states, Iceland, Liechtenstein, and Norway.

While the scheme is acknowledged to be selective and therefore illegitimate in the Surveillance Authority's decision, it has been permitted because the EEA maritime transport sector "faces fierce international competition from vessels registered in third countries," particularly from lightly-regulated "flags of convenience."

The decision also noted a report by the trade area committee, which concluded that the scheme has failed to contribute to the employment of Norwegian or EEA seafarers on Norwegian-registered ships because the tax refund rate was too low.

Therefore, as a result of the amendment, shipping companies that previously received a 26 percent refund of taxes and social security expenses for seafarers on such vessels may now request a full reimbursement, EFTA said.

The amendment applies to deep sea vessels registered in the Norwegian International Ship Register (NIS). This means vessels operating between continents or long-distance maritime transport carrying large quantities of cargo.

The amendment will apply to NIS vessels above 10,000 gross tons engaged in the transportation of oil, chemicals, gas, and roll-on-roll-off cargo.

Vessels weighing between 3,000 and 10,000 gross tons are excluded from the scheme when performing transport between European ports.

The tax refund scheme was approved by the EFTA Surveillance Authority for a period of 10 years in April 2016.

TAGS: tax | Iceland | Liechtenstein | Norway | social security | trade | Europe

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