Commission’s proposals to Greece on tonnage tax

The European Commission has sent to Greece a set of proposals to ensure that State support to the maritime sector in Greece complies with EU state aid rules. In particular, the Commission wants to avoid that favorable tax treatment reserved for maritime transport providers is also extended to shareholders of shipping companies and other operators in the sector such as maritime sector intermediaries and operators of ships which do not provide maritime transport services.

Although Community guidelines on the maritime sector allow Member States to tax companies based on tonnage rather than on profit, the Commission holds that the Greek tonnage-based taxation scheme (based on Greek law 27/1975) “… is not well targeted and benefits the shareholders of shipping companies as well as companies other than maritime shipping companies, beyond what is permitted …”

For this reason the Commission asked Greece “…to review which vessels are eligible under its system and exclude fishing vessels, port tugboats, as well as yachts rented out to tourists without a crew from the preferential regime. Operators of such vessels should in future be subject to the standard income tax…”. Preferential tax treatment should also be removed for “… insurance intermediaries, maritime brokers and other maritime intermediaries as well as the shareholders of shipping companies – none of which conduct genuine maritime transport activities …”.

The taxation scheme concerned has been in force since 1975, before Greece joined the European Union. It is therefore considered as “existing aid” and subject to a specific cooperation procedure. Today’s decision follows a service letter sent in 2012. The Commission expressed its preliminary concerns concerning the compliance of the Greek legislation with EU state aid rules.

Greece has two months to inform the Commission whether it will agree to the proposed measures. If Greece accepts, it will have to amend its national rules with effect from 1st January 2019 at the latest.

The non-confidential version of the decision will be published in the Official Journal of the EU (case number SA.33828).