globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

18 December 2019

Cypriot Tonnage Tax re-approved by European Commission for new 10-year period as of 1 January 2020

On 16 December 2019, the European Commission (the Commission) approved under European Union (EU) State aid rules, among others, the extension of a tonnage tax and seafarer scheme in Cyprus.

The Commission assessed the Cyprus tonnage tax scheme under EU State aid rules, in particular its Guidelines on State aid to maritime transport (the Maritime Guidelines) and established that the tax scheme is in line with its interpretation of the Maritime Guidelines. In its application of the Maritime Guidelines, the Commission is determined to ensure consistency and equal treatment of shipping companies throughout the EU while at the same time making sure that any beneficial tonnage tax and seafarer schemes do not contravene internal market rules. The Commission ensures in particular that there is no spill-over of the favorable tax treatment of shipping companies into other sectors unrelated to maritime transport, that there is no discrimination against other EU or European Economic Area (EEA) State registries and that the aid does not exceed the ceiling set out in the Maritime Guidelines.

The Commission found that the Cyprus tonnage tax scheme complies with the rules limiting tonnage taxation to eligible activities and vessels. Furthermore, as regards taxation of dividends of shareholders, the Commission found that the Cypriot tonnage tax scheme ensures that shareholders in shipping companies are treated in the same way as shareholders in any other sector.

With respect to the seafarer scheme Cyprus has agreed to apply the benefits of its respective scheme to all vessels flying the flag of any EU or EEA Member State (instead of Cyprus-flagged vessels exclusively).

The Commission concluded that both the tonnage tax and seafarer schemes are in line with EU State aid rules, as they will contribute to the competitiveness of the EU maritime transport sector and encourage ship registration in Europe, while at the same time preserving Europe’s high social, environmental and safety standards and ensuring a level playing field.

The non-confidential version of the decision with more details is expected to be published shortly.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Cyprus Limited, Limassol

ATTACHMENT

Document ID: 2019-6612

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more