E.U. to Fund Maritime Schemes in Five Countries

The European Commission has approved state aid for five schemes to support maritime transport in Cyprus, Denmark, Estonia, Poland and Sweden. The schemes aim to encourage ship registration in Europe and to contribute to the global competitiveness of the sector without unduly distorting competition.

The initiatives are:

• the introduction of a tonnage tax and seafarer scheme in Estonia,
• prolonging a tonnage tax and seafarer scheme in Cyprus,
• the introduction of a new seafarer scheme in Poland,
• prolonging and extending a seafarer scheme in Denmark, and
• prolonging a seafarer scheme in Sweden.

To address the risk of flagging out and relocation of shipping companies to low-tax countries outside of the E.U., the Commission's 2004 Guidelines on State aid to maritime transport allow Member States to adopt measures that improve the fiscal climate for shipping companies. The most prominent of such measures is tonnage tax, where shipping companies can apply to be taxed based on a notional profit or the tonnage they operate, instead of being taxed under the normal corporate tax system. This can reduce the overall level of taxes paid and increase their predictability for the companies. 

Under seafarer schemes, labor costs (i.e. income tax and social security contributions) for seafarers may be partly or totally reduced.