Malta Tonnage Tax Regime approved by the European Commission

 -  19/February/2018

The European Commission approves the Maltese tonnage tax scheme for a period of ten years under the EU State Aid Rules.

This decision was taken subject to commitments, following an in-depth investigation, namely for Malta to make changes to its scheme in order to prevent any discrimination between shipping companies and to avoid undue competition distortions. This revised scheme will ensure level playing field between Maltese and other European shipping companies.

As Commissioner Vestager stated, “Tonnage tax systems are meant to promote the competitiveness of the EU shipping industry in a global market without unduly distorting competition. … Moreover, by encouraging the registration of ships in the EU, the scheme will enable the European shipping industry to keep up its high social and environmental standards”. To improve the fiscal climate for shipping companies, Member States were allowed to adopt measures whereby 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, hence the tonnage tax.  

The Commission therefore assessed the amended measures and concluded that the revised Maltese scheme is in line with EU State aid rules allowing a shipping company to be taxed on the basis of ship net tonnage. It also confirmed that the scheme can keep its flat rate tonnage tax, which is paid upon registration, and the subsequent annual registration fee of a ship. The tonnage tax benefit/exemption is granted to those companies owning or bareboat chartering ships registered in Malta or the EU, provided that such ships are involved in the international carriage of goods and passengers.

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