On 16 December 2019, the European Commission (EC) approved the extension of the Tonnage Tax system applicable to the shipping industry in Cyprus for 10 years starting from 1 January 2020. The decision of the EC provides, in addition to the benefits offered by the scheme, the stability required for making investment, operating and other decisions. It is reminded that the system is applicable to qualifying vessels, shipping and related activities and beneficiaries.
The EC assessed and re-approved the Cyprus Tonnage Tax system under EU State aid rules, in particular under its Guidelines on State aid to maritime transport (the Maritime Guidelines). The Commission resolved that the scheme offered by Cyprus complies with the rules limiting tonnage taxation to eligible activities and vessels. For what concerns taxation of dividends of shareholders, the EC concluded that the Cyprus system ensures that shareholders in shipping companies are treated in the same way as shareholders in any other sector.
For what concerns the Seafarer scheme, Cyprus has agreed to extend the relevant benefits from Cyprus-flagged vessels only to all vessels flying the flag of any EU or EEA Member State.
The EC concluded that the Tonnage Tax system and Seafarer scheme offered by Cyprus will contribute to the competitiveness of the EU maritime transport sector and encourage ship registration in Europe, while at the same time promoting high social, environmental and safety standards and ensuring a level playing field.
Further details will be reported as soon as the full text of the EC decision becomes available.
