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Shipping
incentives
The Netherlands
May 2012
Shipping incentives
The Netherlands has been an active shipping nation for a long time. Due to
its geographical situation, excellent infrastructure, the port of Rotterdam as
Europes largest port and its highly educated workforce, it is one of the main
gateways to Europe.
The Dutch Government recognises the
importance of the shipping industry for the
Dutch economy. It is therefore stimulating
shipping activities with several tax facilities
for shipping companies.
Dutch tonnage tax regime
The Dutch tonnage tax regime is a
favourable tax regime for companies active
in the shipping and offshore industry. The
Dutch tonnage tax regime applies to the
following vessels:
Vessels used for transportation of
goods or persons in international sea
transport;
Vessels used for transportation of goods
or persons in relation to the exploration
or exploitation of natural resources at
sea;
Vessels used for support services related
to exploration and production at sea;
Vessels used for dredging operations at
sea;
Towing and support services at sea;
Transportation activities of cable laying
vessels, pipe laying vessels, research
vessels and crane vessels.
The Dutch tonnage tax regime only applies
to transportation activities at sea. A profit
split has to be made for profits derived
from installation and/or research activities
which are subject to the regular corporate
income tax rules.
Conditions of tonnage tax regime
For the application of the Dutch tonnage
tax regime, a request should be filed with
the Dutch Tax Authorities in the first year
to confirm that all conditions have been
met. If granted, the Dutch tonnage tax
regime will apply for a period of 10 years.
After 10 years, the shipping company may
decide to become subject to the normal tax
regime again.
Apart from the conditions stated above,
other requirements with respect to (i)
ownership, (ii) management and (iii)
flag should be met for applying the Dutch
tonnage tax regime:
(i) a vessel should be owned, co-owned
or bare boat chartered (time charter
could - under certain conditions -
apply);
The Dutch tonnage tax regime is a
favourable tax regime for companies
active in the shipping and oshore
industry.
(ii) management of the vessel should, to a
considerable extent, be carried out in
the Netherlands;
(iii) a vessel should sail the flag of an EU/
EEA Member State, but exemptions
may apply.
For a large number of vessels that become
operational in the 2012 calendar year,
an exemption with respect to the flag
requirement may apply.
Commercial management and/or crew and
technical management may also fall within
the scope of the Dutch tonnage tax regime.
Taxable profits
The taxable operating profit of a vessel
is based on the vessels tonnage and not
the actual operating results. This profit
is subsequently subject to the ordinary
corporate income tax rates. Apart from that,
non-qualifying shipping income is subject to
regular taxation rules.
Corporate income tax rates as per 2012:
(i) profits up to EUR 200,000: 20%;
(ii) profits above EUR 200,000: 25%.
Calculating the tonnage tax
The taxable operating profit of a vessel is
calculated by using five tonnage size groups
(see below). The calculation should be
made based on the net tonnage. The profit
calculated is subsequently taxed against the
statutory corporate income tax rate.
Amount of profit per day per 1,000 net ton
per day
up to 1,000 net ton 9.08
for the excess up to 10,000 ton 6.81
for the excess up to 25,000 ton 4.54
for the excess up to 50,000 ton 2.27
for the excess over 50,000 ton 0.50
The reduced rate of 0.50 per 1,000 net
ton per day is only applicable in specific
circumstances.
Other tax incentives for shipping
companies
Wage cost deduction for seafarers
The wage cost deduction is, under certain
conditions, applicable to vessels that fly
the Dutch flag and operate mainly at sea.
Shipping companies that act as withholding
agents for Dutch income tax purposes can
deduct 40% of the wages of EU and EEA-
resident taxpaying seafarers from the total
amount of wage tax paid. For seafarers
that are not EU or EEA residents, but who
are subject to Dutch wage tax or national
insurance contributions, the deduction
amounts to 10%.
Accelerated depreciation of ships
Shipping companies which qualify for the
tonnage tax regime, but do not opt for it,
are taxed at the normal corporate income
tax rate. These companies may apply for
accelerated depreciation. The annual rate
for accelerated depreciation is 20% of the
initial cost less the residual value. The
accelerated depreciation is limited to the
profit made on the shipping business. The
remainder can be used in the following
year(s).
Investment allowances
Investments in energy or environmentally
friendly assets/parts may provide for an
additional tax deduction of up to 41.5%.
Possibility of fiscal unity
A fiscal unity can be formed with other
group companies. This includes group
companies with no shipping activities. If one
shipping company within the group applies
for the tonnage tax regime, all the shipping
companies in the group should apply for the
tonnage tax regime.
The Netherlands extensive treaty network,
reducing freight taxes
Freight taxes do not apply in the
Netherlands, but they do apply in some
countries with which the Netherlands has
entered into tax treaties. This may result in a
partial or full exemption of freight taxes.
Zero rating for VAT purposes
The supply and the leasing of seagoing
vessels are zero-rated for VAT purposes
(except for yachts used for recreational
purposes). Supply of goods and services to
outbound seagoing vessels are zero-rated in
many cases.
In principle, businesses can recover the
Dutch VAT incurred.
Contact details
For more information, please contact:
Jeroen Boonacker
jeroen.boonacker@nl.pwc.com
Phone: +31 88 792 3673
Maarten Arends
maarten.arends@nl.pwc.com
Phone: +31 88 792 4333
This memorandum incorporates the views of PricewaterhouseCoopers Belastingadviseurs N.V. on certain tax consequences for Dutch shipping companies. Our view has
been formed based on the laws, final, temporary and proposed regulations, and administrative and judicial interpretations in force as of the date of the memorandum
insofar as they relate to particular issues discussed in the memorandum. The content of this memorandum is subject to any changes in law and the interpretation and
application thereof, which changes could be made with retroactive effect.
This memorandum does not purport to be a comprehensive description of all the tax considerations that may be relevant and does not purport to deal with all the tax
consequences applicable to all categories of investors/companies. The comments contained in this document are intended to provide general guidance and should not
be relied upon as an opinion. Investors/companies are strictly recommended to consult PricewaterhouseCoopers Belastingadviseurs N.V. on the tax consequences before
investing in or setting up Dutch shipping companies.