The EU has launched a critical review of the tax discounts which European countries have in place to support the shipping industry.The Commission is especially looking into tonnage tax schemes implemented before 2004 when the current guidelines for state subsidies to the maritime sector were passed. This also applies to Denmark's tonnage tax which was introduced in 2001/2002.
If the review reveals that an old taxation scheme does not meet guideline requirements, the countries could then be forced to change the scheme, states the Commission."A key objective of the Commission's enforcement actions in relation to tonnage tax schemes in various Member States is to ensure equal treatment and non-discrimination across the EU, in order to limit competition distortions," one spokesperson tells ShippingWatch."Furthermore, some of the longstanding schemes, which have come into force before the 2004 Maritime Guidelines entered into force have never been aligned to those new rules and therefore may require adaptation to comply with the legal framework," the Commission states.The Danish Shipowners' Association does not expect, however, that the Danish tonnage tax scheme will have to be adjusted. Director Jacob K. Clasen points out that the EU regulations allow for countries to adapt schemes nationally as long as they do not distort competition."We are not familiar with carriers from other countries finding problems with the Danish rules and therefore we do not expect that the Commission will demand major changes to the Danish regulations," he tells ShippingWatch.Denmark waiting for an answerThe EU review of tax schemes, which ShippingWatch reported last week, could lead to more a restrictive interpretation of the guidelines in place, according to several sources.
It also arrives at a time at which the Danish government is still waiting for approval for its expansion of the tonnage tax passed by a parliamentary majority in December 2015.The expansion entails that, going forward, the scheme would also apply to offshore vessels. But after one year of waiting, Denmark's Minister for Industry, Business, and Financial Affairs Brian Mikkelsen has still not received a verdict from the European competition authorities."I'm both irritated and very disappointed that we haven't received the EU Commission's approval yet. There is a risk that this won't happen but we're still fighting for it and no decision has been made yet," he told ShippingWatch in April.Denmark seeks to expand seafarer taxThe Danish government recently received the recommendations from the maritime growth team, which it appointed last year. Unsurpringsly, taxes took the spotlight at the presentation two weeks ago.
Topping the industry's list was an expansion of the seafarer tax which allows carriers registered in the Danish International Ship Register (DIS) to pay net wages to their staff. This means that the carriers have lower wage expenses because employees are exempt from paying tax on their wages.The industry wants this scheme, like the tonnage tax, to be expanded to also cover offshore vessels. This requires approval from the EU and therefore the industry is now anxiously awaiting the EU's decision about the tonnage tax, which is considered a litmus test.If the EU rejects the expansion, this could very well prove a lethal blow for a corresponding expansion of DIS. On the other hand, approval for the tonnage tax could pave the way for an expanded seafarer tax.Fitter scheme not a great fitIn its recommendations, the growth team also points to a need for a "fitter scheme", which would ensure tax exemption for Danish fitters.The industry association Danish Maritime has fought for years for technicians who travel abroad for work to have their wages paid net just like other employees of the carriers in DIS.According to the Danish minister for trade, the initial reports from the Commission indicate that it could be difficult to implement a fitter scheme.However, the minister is willing to try, while Danish Maritime and the association's lawyers consider it do-able.
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