Offshore Fleet Cleared to Join Danish Tonnage Tax Scheme

The European Commission has approved under EU State aid rules the extension of the existing Danish tonnage tax scheme to additional types of vessels. 

Under tonnage tax schemes, maritime transport companies pay taxes on the basis of the ship tonnage (i.e. the size of the shipping fleet) rather than on the basis of their actual taxable profits.

In May 2016, Denmark notified to the Commission its plans to extend its existing tonnage tax scheme to cover guard vessels, vessels servicing offshore installations and vessels for raising, repairing and dismantling wind turbines as well as pipeline- and cable-laying vessels, ice management vessels and accommodation vessels.

The Commission has decided that those types of vessels are involved in maritime activities that are subject to the same legal requirements and competitive conditions as maritime transport and has therefore approved the extension of the scheme to these vessels under EU State aid rules.

The decision also confirms that Denmark will amend certain aspects of its existing tonnage tax scheme to align it with the Commission’s current interpretation of the Guidelines on State aid to maritime transport.

In particular, Denmark will amend its tonnage tax rules as regards:

• ancillary services that are closely connected to shipping activities. These services will be subject to tonnage taxation only if they account for less than 50% of a ship’s total tonnage-taxed income, and
• revenues from bareboat charter out activities. The services will be subject to tonnage taxation provided that the beneficiary self-operates at least 50% of the tonnage tax fleet and that the vessel is not leased out for a period longer than three years.

The move is expected to encourage ship registration in Europe and contribute to the global competitiveness of the sector without unduly distorting competition.

Commissioner Margrethe Vestager in charge of competition policy, said: “Denmark’s revised tonnage tax scheme will help the shipping industry remain competitive on the global market. It will preserve jobs and promote high environmental standards in the maritime transport sector. The scheme complies with the Commission’s State aid guidelines and contains new safeguards to ensure equal treatment of European shipping companies and avoid distortions of competition.”