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KEYNOTE SPEECH
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EU maritime transport matters for the EU economy
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Maritime Guidelines contribute to the EU as
an attractive location for maritime transport
Since the 80's, vessels flagged What is the aim of the MG, which
out of the EU and shipping allow for a more competitive fiscal
companies relocated to low-tax and social regime for EU maritime
third countries transport under the State aid
rules?
Several factors impact the Encourage ship
attractiveness of a location for registration in the EU
maritime transport: fiscal Help the EU shipping
incentives, skills base, quality of industry to remain
the shipping register, ease of doing competitive on the global
business, etc. market
Preserve employment,
improve maritime know-
how and promote high
environmental standards
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Maritime Guidelines are a "one of a kind" SA instrument
• MG address (fierce) competition from third countries
The fiscal and social regimes allowed under the MG constitute operating aid,
financing part of the day-to-day operations of a company
The Commission generally considers operating aid to be particularly distortive.
However, these measures are allowed under certain conditions in the maritime
transport to increase the maritime transport EU competitiveness on a global
market
+ -
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Maritime Guidelines Harmonized Standards
2009 GL No MG
Based on Development Consistent
review
on SA to ship 2012 public Harmonized application
2004 MG during
management consultation, Standards Harmonized
current COM
companies no review since 2012 Standards
mandate
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Looking ahead
• The Commission progressively developed Harmonized Standards
since 2012 and has systematically enforced these, also in
recent decisions (e.g. Malta, Portugal). Examples include
clarification on:
• Eligibility conditions for service vessels
• Flag link requirements
• Eligibility conditions for bareboat chartering out
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European Commission
MARITIME TRANSPORT
REGIMES -
INTRODUCTION
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Current EU Maritime transport schemes
assessed under State aid rules
What fiscal measures to eligible operators are covered?
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What labour-cost reductions are covered?
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Member States may choose to lower labour costs in 2 ways
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Duration of maritime transport regimes
RULE: According to established case law, (case C-67/09 P Nuova Agricast) aid
schemes cannot be approved as compatible aid under Article 107(3) TFEU
for an unlimited duration. Schemes must be subject to a regular review of
their effectiveness and impact.
• In line with recent case practice, the Commission will accept a duration of
up to 10 years both for tonnage tax and seafarer schemes
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European Commission
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TONNAGE TAX SCHEMES
• Scope of the MG
• Chartering (time, voyage and bareboat)
• Level of the tonnage tax
• Aid ceiling
• Hidden tax liabilities
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping companies
• Flag link requirements
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What is the scope of the Maritime Guidelines?
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Eligible vessels
Eligible operators
Eligible revenues
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Eligible vessels
Eligible operators
Eligible revenues
Application • Certain service vessels are considered to be eligible for State aid,
by analogy although their main activity is not maritime transport, provided they
share three important common characteristics with vessels that
perform maritime transport:
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Eligible vessels
Eligible operators
Eligible revenues
Qualifying operators:
Ship-owning companies
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Eligible vessels
Eligible operators
Eligible revenues
Which
Whichrevenues
revenuesofofeligible
eligiblevessels
vesselsqualify?
qualify?
Non-eligible revenues
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Eligible vessels
Eligible operators
Eligible revenues
NON-ELIGIBLE
CORE revenues ANCILLARY revenues
revenues
• Ticket sales • Rental of advertising billboards • Activities whose purpose is not
• Cargo transportation on-board transporting goods or
• Letting of cabins (maritime • Provision of services passengers, such as fishing
voyage) customarily offered on activities
• Sale of food and drinks for passenger ships, incl. spa, • Acquisition of cars, livestock,
immediate consumption on hairdresser services, gambling property
board and other entertainment • Scheduled passenger transport
• Chartering activities (under services activity in inland or river
certain conditions) • Renting out of ship premises to waters
shop and services' operators
Ring-fencing measures
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TONNAGE TAX SCHEMES
• Introduction
• Scope of the MG
• Chartering (time, voyage and bareboat)
• Level of the tonnage tax
• Aid ceiling
• Hidden tax liabilities
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping companies
• Flag link requirements
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There are different types of chartering
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When are chartering activities eligible?
• Key questions:
– Does the lessor (chartering-out the vessel) or the lessee
(chartering-in the vessel) carry out maritime transport
activities?
– Do the activities (otherwise) contribute to the objectives of the
MG?
• The following activities are therefore excluded in any case:
– Pure leasing activities
– Chartering-in of a purely non-EEA flagged fleet
• Under strict conditions, the Commission considers the following
activities as eligible:
– Chartering-in
– Bareboat chartering out
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When are chartering-in activities eligible?
Chartered • The Commission has considered these chartering activities (i.e. time or
vessels NOT voyage chartering-in) to contribute to the MG objectives and
equipped, therefore to be eligible, for instance, if:
crewed or − For at least 20% of the fleet of the tonnage tax beneficiary, the
managed by crew and technical management is ensured by the beneficiary, or
charterer − At least 25% of the beneficiary's entire fleet is EEA-flagged
• In addition, the beneficiary must commit to maintain/increase the
share of EEA-flagged tonnage of its fleet
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When are bareboat charter-out activities eligible?
Rule • In principle, bareboat chartering-out is not a maritime transport
activity, but rather a leasing activity (main transport risk rests w/
lessee)
• Therefore, to limit unfair competition towards genuine leasing
companies, BBO activities may only be eligible for tonnage tax if they
address an ancillary temporary leasing activity (in particular a
situation of temporary overcapacity). The Commission has considered
this to be the case if the following conditions are fulfilled cumulatively:
Bareboat chartering-out contracts are restricted to a maximum
period of three years
The temporary chartering-out activity is related to the
beneficiary's own shipping services (this means that excess
capacity specifically acquired (bought or chartered) for chartering-
out purposes is ineligible for tonnage taxation); and
At least 70% of the tonnage taxed fleet is still operated by the
tonnage tax beneficiary
• Scope of the MG
• Chartering (time and voyage in, bareboat in and
out)
• Level of the tonnage tax
• Aid ceiling
• Hidden tax liabilities
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping companies
• Flag link requirements
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The Maritime Guidelines cap the the level of tonnage tax
RULE 1: The Commission will only approve tonnage tax schemes giving rise
to a tax-load for the same tonnage fairly in line with the schemes already
approved
Going forward, the Commission will therefore compare the taxation level of
tonnage tax schemes to verify that is not below what was accepted by the
Commission so far:
• Vessel age
• Yearly adjustments
• etc…
TONNAGE TAX SCHEMES
• Scope of the MG
• Chartering (time and voyage in, bareboat in and
out)
• Level of the tonnage tax
• Aid ceiling
• Hidden tax liabilities
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping companies
• Flag link requirements
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What is the maximum amount of aid?
Rule
• To ensure:
• The amount of aid under any (i.e. also other than tonnage tax)
corporate taxation measures of shipping activities can
never exceed:
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TONNAGE TAX SCHEMES
• Scope of the MG
• Chartering (time, voyage and bareboat)
• Level of the tonnage tax
• Aid ceiling
• Hidden tax liabilities
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping companies
• Flag link requirements
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Why are hidden tax liabilities relevant under the SA rules?
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What compensation mechanism is required?
Rules • Step 1: Determine the amount of the hidden liabilities at the time of
entry into the TT based on the amount of tax deferred A-B, with
Upon the expiry of 10 years from the entry into the tonnage tax
scheme or when the vessel is sold, whichever comes first
• In these cases, the hidden liabilities may be reduced by
10%/yr (up to the aid ceiling)
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TONNAGE TAX SCHEMES
• Scope of the MG
• Chartering (time, voyage and bareboat)
• Level of the tonnage tax
• Aid ceiling
• Hidden tax liabilities
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping
companies
• Flag link requirements
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Dividends and capital gains from the sale of shares in
shipping companies are not eligible
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TONNAGE TAX SCHEMES
• Scope of the MG
• Chartering (time and voyage in, bareboat in and
out)
• Preferential tax treatment of capital gains &
dividends for shareholders in shipping companies
• Hidden tax liabilities
• Level of the tonnage tax
• Aid ceiling
• Flag link requirements
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3 types of "flag link" requirements in TT schemes
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I. EEA flag link requirement in TT schemes (1)
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I. EEA flag link requirement in TT schemes (2)
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II. TT EEA flag entry level
Rule
General rule
*
• If the tonnage share of EEA-flagged vessels of the entrant's fleet is below 60%:
• *
If the share of EEA-flagged vessels of the entrant's fleet is above 60%:
*
there is no such obligation for the beneficiary, as long as the share remains
above 60%
Derogation possible if
• No decrease in Community-flagged share of the global eligible tonnage in the MS
during the 3-yr period from the date when the relief was granted
• MS must report the award of such derogation to the Commission every 3 years
*On the date of entry into force of the 2004 MG or on the date of the COM's approval decision 43
III. EEA flag entry floor for new entrants in TT scheme
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European Commission
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COST REDUCTION SCHEMES FOR SEAFARERS
• Eligible seafarers
• Eligible vessels and activities
• Aid ceiling
• Flag link requirement
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Which seafarers are eligible?
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COST REDUCTION SCHEMES FOR SEAFARERS
• Eligible seafarers
• Eligible vessels and activities
• Aid ceiling
• Flag link requirement
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Which vessels/activities are eligible?
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COST REDUCTION SCHEMES FOR SEAFARERS
• Eligible seafarers
• Eligible vessels and activities
• Aid ceiling
• Flag link requirement
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What is the maximum amount of aid
in a seafarer scheme?
Rule
The amount of aid under a Seafarer scheme can never
exceed:
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COST REDUCTION SCHEMES FOR SEAFARERS
• Eligible seafarers
• Eligible vessels and activities
• Aid ceiling
• Flag link requirement
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"flag link" requirement in seafarer schemes
There is 1 flag
link requirement
for TT schemes:
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EEA flag link requirement in seafarer schemes (1)
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EEA flag link requirement in seafarer schemes (2)
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Susana Batista
Deputy Director-General of Natural Resources, Safety and
Maritime Services, Portugal
RECENT CASE:
PORTUGUESE MARITIME
TRANSPORT SCHEME
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DISCUSSION
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Henrik Mörch
Director for Transport, Post & Other Services
CLOSING REMARKS
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This document has been prepared for the European Commission; however, it reflects the views
only of the authors, and the Commission cannot be held responsible for any use which may be
made of the information contained therein.
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