Foreign
ship management companies which run their shipping fleets
from Greece are currently exempt from all Greek taxes
on profits provided:
- They
obtain a special permit from the Economic Ministry
and the Mercantile Marine Ministry.
- They
import a minimum of USD50,000 annually to cover their
office running costs.
- They
place a USD10,000 bond with the Government.
Ships which
fly the Greek flag can avail themselves of the following
fiscal incentives:
- No corporate
income tax is payable. Instead these ships pay a shipping
tonnage tax calculable by reference to the category
of ship, its age and its tonnage (as measured in koros).
- Shipping
tonnage tax is reduced significantly in the following
situations:
- a
50% reduction if the ship flies the Greek flag
and trades regularly between Greek and foreign
ports or alternatively solely between foreign
ports.
a 60% reduction if the ship flies the Greek flag
and is a passenger ship, a sailing vessel or a
motor vessel.
- a
75% reduction if the ship flies the Greek flag
and is a fishing vessel.
- Ships
flying the Greek flag are exempt from capital gains
tax if they have a displacement in excess of 1,500
gross tons. If their displacement is less than 1,500
gross tons they pay a capital gains tax of USD1 per
gross ton meaning that the sale of a ship in Greece
is (at the time of writing) subject to a maximum capital
gains tax of USD1,500.
The favorable
tax regime which applies to ships flying the Greek flag
partly explains the large size of the Greek maritime
fleet.
At
the start of 2002, the tonnage tax on cargo ships that
trade regularly between Greek and foreign ports, or
exclusively between foreign ports, was reduced by 50%.
Greek-flagged cruise vessels also received the 50% reduction.
At
the same time, Greece reduced the tax burden on its
seafarers, cutting the income tax for officers from
nine percent to six percent and halving the tax rate
on ratings to just three percent. If a ship that is
subject to the tonnage tax is not trading because of
repair work, lack of employment or for any other reason,
the tonnage tax payable is reduced in proportion to
the number of days during which the ship was not trading,
provided that this time period exceeds two consecutive
months during the previous or relevant financial year.
Greece’s
tonnage taxation system covers any of a shipowner’s
income that is derived from that shipowner’s use
of his Greek-flagged ship(s) for commercial purposes.
However, interest from bank deposits comprised of fares
and other monies derived from the commercial use of
ships is not deemed to constitute income from shipping
activities, and is therefore taxed under the general
rules of income taxation. The following exemptions apply
to ships under the Greek tonnage tax regime:
- Ships
built in Greece and registered under the Greek flag
are exempt from tonnage tax until they are six years
old; Ships that undertake regular voyages between
Greek and foreign ports, or exclusively between foreign
ports, as well as cruise vessels, are entitled to
a 50% reduction on the tonnage payable;
-
Ships less than 20 years old that have been repaired
in Greece are exempt from tonnage tax for a number
of years corresponding to one year for every USD100,000
spent on the repairs. However, in order to benefit
from the exemption, the cost of repairs must have
been paid using imported foreign currency. This exemption
cannot exceed 50% of the total cost of the repairs,
is applicable from the year following the date of
completion of the repairs, and is valid for a maximum
period of six years.
The
Greek shipping tax regime was included on the list of
'Harmful Tax Practices' issued by the EU's Code of Conduct
Committee, which requested its replacement with a formula-based
tax linked to age, tonnage and type of vessel. A 2006
update by the OECD on its 'Harmful tax Practices' project,
however, listed the Greek shipping tax regime as "not
harmful." The outcome is unclear.
|
Daily, updated news about tax and offshore from our
team of 20 international journalists
