Portugal: EC approves tonnage tax regime | KPMG | GLOBAL
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Portugal: EC approves tonnage tax regime

Portugal: EC approves tonnage tax regime

The European Commission today issued a release announcing that the EC has approved under EU state aid rules a Portuguese tonnage tax regime that, together with a system to support seafarers, will encourage ship registration in Europe and contribute to the competitiveness of maritime transport while preserving employment in the sector and promoting high environmental standards.

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As explained in an EC release, under the newly introduced Portuguese tonnage tax regime maritime transport companies will pay taxes on the basis of the net tonnage (i.e., the size of the shipping fleet) operated in maritime transport activities rather than on the basis of their taxable profits. In particular, tonnage taxation will be applied to a shipping company's:

  • Core revenues from maritime transport activities, such as cargo and passenger transport
  • Certain ancillary revenues that are closely connected to shipping activities (capped at a maximum of 50% of a ship's operating revenues)
  • Revenues from towage and dredging under certain conditions

In addition, for certain “more environmentally friendly” ships, companies can achieve an additional reduction of 10% to 20% of the tax base under the tonnage tax regime.

The tonnage tax regime requires that to be eligible for the regime’s benefits, a significant part of a company’s fleet must fly the flag of a European Economic Area (EEA) state (that will encourage shipping companies to register their ships in the EEA). The new Portuguese seafarer system exempts seafarers employed on vessels that are eligible under the tonnage tax regime from paying individual (personal) income tax, and allows them to pay reduced rates of contribution for social insurance.

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