Eligible activities and flag requirements
To be eligible for application of the tonnage tax scheme, profits must be derived from the operation of seagoing vessels for the following shipping activities:
- The international transport of goods or passengers overseas.
- The transport of goods and passengers overseas for the purpose of exploring or exploiting natural resources at sea. This category includes for instance transport ships and supply ships used in the offshore industry.
- Towing activities or the provision of general assistance to ships at sea. Ships whose activities mainly consist of towage services in ports are excluded.
- Sea-dredging services. Ships eligible are those whose operational activities consist for more than 50% of transportation at sea.
- Exploration of the seabed (research ships).
- Cable and pipe-laying on the seabed.
- Tackle and lifting activities at sea (crane ships).
Profits from ancillary activities directly related to these qualifying shipping activities are included in the tonnage-tax scheme provided that the ancillary activities will not exceed 50% of the overall annual gross revenue (both ship-specific and other) of the tax payer. These include loading and unloading (stevedoring), as well as ship-brokering activities carried out by the taxpayer itself. Directly related activities of this kind fall within the scope of the regulations insofar as they are performed on behalf of ships operated by the taxpayer.
As regards the vessels mentioned under 3 – 7 above the tonnage tax based profit will be supplemented with the profits derived from activities other than towing or general assistance, transportation of dredged material and transportation of goods or persons over sea respectively. For these profits the regular tax regime applies.
The following activities with respect to a qualifying ship can be carried out under the tonnage tax scheme:
- The taxpayer conducts the management of the ship to a significant extent and the ship flies the flag of one of the member states of the European Union (EU) or of the European Economic Area (EEA) and the ship is owned or co-owned by the taxpayer, and is not chartered out under bareboat agreement;
- The taxpayer mainly conducts the commercial management of a ship owned by another company, provided that the taxpayer conducts the management of one or more other ships in the manner as described in point 1. above, whereby co-ownership means the taxpayer’s share in the ship is at least 5%;
- The taxpayer operates the ship by time or voyage charter, provided that the taxpayer conducts the management of one or more of its ships in the manner as described in point 1. above, provided that the taxpayer’s share in the ship (co-ownership) is at least 5% and provided that the annual total of the net tonnage of the non-EU/EEA ships that are being operated by time or voyage charter is not more than 75% of the annual total of the net tonnage of all ships which qualify for the tonnage tax. The net tonnage of the ships in co-ownership is taken into account as the pro rata ownership percentage unless the taxpayer executes the crewing, technical/nautical and commercial management of the ship (see below for two examples).;
- The taxpayer conducts the entire crewing and technical/ nautical management of the ship in the Netherlands on behalf of a third party, provided that the ship flies the flag of a member state of the EU or of the EEA.
Time or voyage chartered ships
Shipping company A operates:
a ship of 2000 NT (net tonnage) in 5% co-ownership. Shipping company A does not perform the total management of the ship.
several ships in time or voyage charter: 1200 NT non EU/EEA flag and 300 NT EU/EEA flag
Annual total complete fleet of shipping company A: 5 % x 2000 NT + 1500 NT = 1600 NT
75 % cap: 75% x 1600 NT = 1200 NT. This means that in this year the qualifying time or voyage chartered vessels without an EU/EEA flag may not exceed 1200 NT. Therefore the non EU/EEA flagged ships that are operated by time or voyage charter qualify for the tonnage tax.
Shipping company B operates:
a ship of 2000 NT in 5 % co-ownership. Shipping company B does not perform the total management of the ship.
several ships in time or voyage charter, all under non-EU/EEA flag with an annual total of the net tonnage of 1500 NT
Annual total complete fleet of shipping company A: 5% x 2000 NT + 1500 NT = 1600 NT
75 % cap: 75% x 1600 NT = 1200 NT. This means that in this year the qualifying time or voyage chartered vessels without an EU/EEA flag may not exceed 1200 NT. Therefore the non EU/EEA flagged ships that are in time or voyage charter do not qualify for the tonnage tax.
A decision every 10 years
The decision to opt for the tonnage tax scheme has to be made in the first year that taxable profit from shipping operations is made, or in every tenth year thereafter. Upon approval of the application by the tax authorities, the tonnage tax scheme will be applicable for 10 years. After each 10-year period, a company may continue in the scheme for another 10 years or revert to the regular system of taxation.