The European Committee has approved to prolong three elements of the Dutch tonnage tax regime up to 31 December 2028. These elements are additions to the tonnage tax regime, as is allowed within the European Union under the state aid rules. These measures were approved in 2009 and 2010 for a period of 10 years and are now approved again. However, some changes in the Dutch tonnage tax regime will need to be made.

Current legistlation and required changes

The three elements of the Dutch tonnage tax regime that are approved are:

1. The reduced rate for vessels under 50,000 nett tonnage;
2. Application of the Dutch tonnage tax regime to ship management companies;
3. Application of the Dutch tonnage tax regime to cable-laying vessels, pipeline laying vessels, research vessels and crane vessels.

The European Committee has granted approval to the Netherlands for apply these elements within the Dutch tonnage tax regime up to 31 December 2028. However, the approval has been granted as the Dutch government has agreed to make the three following changes to the regime:

1. The flag requirement will also apply to ship management companies;
2. At least one vessel flies EU/EEA-flag at the start of the tonnage tax regime;
3. Introduction of a 50% cap on the revenues of activities considered ancillary to maritime transport.

These changes will apply as from 1 January 2020. We expect the legislative bill to be published on Budget Day (Prinsjesdag; 17 September).

Points of attention for shipping companies

If your shipping company also applies the tonnage regime to ancillary activities, the introduction of the 50% cap will be a point of attention. We advise you to check the ratio between your shipping activities and ancillary activities to determine the impact of this measure. The points of attention will be in which way the revenues of both activities need to be accounted for and when an activity will be considered ancillary. For instance, the proceeds of the sale of the business premises is to be considered ancillary.

Points of attention for ship management

For ship mangers it will be important to verify that you comply with the flag requirement. Depending on the legislative bill, the situation in past years may also be relevant in this respect. Furthermore, we advise you to discuss any (possible) upcoming flag changes with the ship owners. Such flag changes may impact your application of the Dutch tonnage tax regime. Hopefully, the legislative bill will provide for transitional law for the current 10 years terms of the tonnage regime.

Closing remarks

We can assist you to conduct an impact analysis of these changes for your business.

Should you have any questions, please do not hesitate to contact us.