The European Commission Approves the Malta Tonnage Tax Regime

Dr. Silvana Zammit | 02 Feb 2018

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After scrutiny and months of deliberation, the European Commission has approved the Malta tonnage tax regime. 

Through the Malta tonnage tax regime, entities undertaking shipping activities are exempt from income tax subject to the payment of a tonnage tax, therefore,  a shipping entity is taxed on the basis of ship net tonnage rather than its actual profits. For a shipping entity to benefit from the Malta tonnage tax regime, a significant part of its fleet must fly the flag of an European Economic Area Member State and at least 25% of its fleet subject to tonnage tax with an EEA flag

The Commission had opened an investigation on the Malta tonnage tax regime to examine its compatibility with EU state aid rules. In furtherance to discussions, Malta has proposed a number of amendements to the regime, which let the Commission to conclude that  the amended Malta tonnage tax regime  is in line with EU State aid rules. The Commission outliend that  the tax relief granted under the Malta tonnage tax regime is an appropriate instrument to address global competition and will provide the right incentives to maintain maritime jobs within the EU, whilst preserving competition within the EU Single Market.

 



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