The European Commission has conditionally approved under European Union State aid rules the Maltese tonnage tax scheme for a period of 10 years.

In order to comply with EU state aid rules, Malta agreed to make changes to the scheme to meet the commission’s objections to it. In particular, Malta agreed to restrict the scope of the scheme to maritime transport and to remove those tax exemptions for shareholders which constitute state aid.

Under the tonnage tax scheme the shipping company is taxed on the basis of ship net tonnage (i.e. based on its volume) rather than the actual profits of the company. In particular, tonnage taxation is applied to a shipping company’s:

  • core revenues from shipping activities, such as cargo and passenger transport;
  • certain ancillary revenues that are closely connected to shipping activities (which are, however, capped at a maximum of 50% of a ship’s operating revenues); and
  • revenues from towage and dredging subject to certain conditions.

If a shipping company wants to benefit from the scheme, a significant part of its fleet must fly the flag of an European Economic Area (EEA) Member State. In addition, any new entrant to the scheme must have at least 25% of its fleet subject to tonnage tax with an EEA flag.

Contact us for more information regarding shipping companies in Malta at [email protected]