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French Taxation Of Time-Chartered Ships Quizzed

by Ulrika Lomas, Tax-News.com, Brussels

13 November 2013


The European Commission has announced the launch of an in-depth investigation to examine whether changes to French tax rules for maritime companies are in line with EU state aid rules.

The Commission's investigation relates to the inclusion of time-chartered vessels sailing under non-EU flags under the aegis of a favorable fiscal tax regime based on tonnage, which was intended solely for companies whose fleet was registered with EU member states.

In May 2003, the Commission approved the French tonnage tax scheme. For shipping companies that opt for this alternative tax regime, the tax base for the corporate income tax is calculated on the basis of the tonnage of the fleet rather than the actual profits of the company. The scheme limited the eligibility of time-chartered ships not flagged in the EU. This scheme was in line with the applicable 1997 EU guidelines on state aid to maritime transport, aimed at enhancing the competitiveness of shipping companies facing competition from non-EU businesses.

After the adoption of the Commission's updated guidelines on state aid to maritime transport in 2004, France removed the specific flagging rules for time-chartered vessels without informing the Commission. The Commission only became aware of this change through its recent monitoring of the implementation of approved state aid schemes.

The initiation of an in-depth investigation gives interested third parties the ability to comment. This consultation does not prejudge the outcome of the investigation, the Commission highlighted.

TAGS: tonnage tax | tax | business | marine | European Commission | interest | France | services | Europe

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