The European Commission in a release on 25 November 2024 announced that the acceptance by Greece of the appropriate measures proposed by the Commission to bring the existing Greek tonnage tax scheme and related measures in line with State aid rules.
The measures had been introduced by Greece to support the shipping sector.
The cooperation between the Commission and Greece
The Commission acknowledges the importance of maintaining a competitive maritime transport sector in the EU. EU State aid rules establish common rules on how Member States can support maritime transport providers, without unduly distorting competition in the Single Market. The Maritime Guidelines enable Member States to tax shipping companies on the basis of tonnage (i.e. based on size of shipping fleet) rather than actual profits, among other things.
In December 2015, the Commission sent a set of proposals to Greece to ensure that State support to the maritime sector in Greece complies with EU State aid rules, in particular the Maritime Guidelines. The Commission had concerns that the Greek tonnage tax scheme and related measures were not well targeted in terms of scope and beneficiaries. Since the measures have already been in place since 1975, before Greece joined the EU, these measures are “existing aid” and subject to a specific cooperation procedure.
In light of the continuous dialogue with the Greek authorities, the Commission decided on 6 November 2024 to partially amend the proposal of December 2015 as regards certain tax benefits relating to dividends and capital gains of shipping companies, as well as the operation of various types of vessels, while maintaining its assessment that these measures are incompatible with the internal market. In addition, the Commission no longer considered it expedient to propose appropriate measures in relation to the inheritance tax exemption.
On 14 November 2024, the Greek authorities accepted the proposed appropriate measures. Today, the Commission formally records the acceptance of the proposed appropriate measures by Greece and brings the cooperation procedure to an end.
Background
Existing aid refers, among other things, to State aid that was put into effect prior to accession of a Member State to the EU, while continuing to apply after the accession. Article 108 of the Treaty on the Functioning of the EU establishes separate State aid procedures for existing and new State aid. While new State aid generally requires notification by the relevant Member State to the Commission for assessment (with exceptions), existing aid is subject to a specific cooperation procedure between Member States and the Commission.
When existing aid appears to be in breach of EU State aid rules, the Commission informs the Member State about its concerns and gives the latter the opportunity to submit comments. If the Commission concludes that the existing aid scheme is not compatible with the internal market, it then proposes appropriate measures to the Member State in question. If the Member State accepts to implement the Commission’s proposal, the Commission adopts a decision formally acknowledging that commitment. This brings the cooperation procedure to an end.
Bringing the Greek tonnage tax scheme and related measures in line with State aid rules does not mean that the shipping sector can no longer receive State support. Under the Maritime Guidelines, Member States are allowed to adopt certain measures that improve the fiscal climate for shipping companies. Only companies that are active in maritime transport (defined as the transport of goods and persons by sea) are eligible for measures under the Maritime Guidelines.
The most prominent of such measures is tonnage tax, whereby shipping companies can apply to be taxed based on a notional profit or the tonnage they operate, instead of being taxed under the normal corporate tax system. This can reduce the overall level of taxes paid and increase predictability.
