Greek Shipowners: No Need for Changes to Tax Regime

The Union of Greek Shipowners disagrees with the European Commission’s recently published decision alleging that some provisions of the Greek shipping taxation regime are in breach of EU state aid provisions.

In December, the Commission sent a set of proposals to Greece asking it to change its maritime tonnage tax to exclude all maritime sector intermediaries and operators of ships, which do not provide maritime transport services.

The Commission said that the Greek tonnage tax system is not well targeted and that the current provisions may breach EU state aid rules by allowing shareholders of shipping companies to benefit from favourable tax treatment that should be reserved for maritime transport providers

According to the union, there is no effective distortion of competition in the maritime field in the EU due to the current taxation scheme.

“Any fundamental changes to the institutional and fiscal framework in which the Greek shipping community is presently operating, would have unforeseeable consequences which would be detrimental not only for Greece but also for the rest of the EU as they would seriously undermine one of its most important strategic sectors which remains prominent internationally in the face of fierce competition,” UGS said.

The union claims that the Greek institutional shipping regime predates the State Aid Guidelines (SAG) band that the Greek maritime framework constitutes pre-accession law, which was recognized during the accession of Greece to the EEC in 1981 and has not been questioned until now.

What is more, DG COMP’s present investigation and decision are not the result of a formal complaint, the union added.

The union further stressed that the 1997 Maritime SAG were not introduced in the form of an EU Directive or Regulation with a view to imposing uniformity of application across the Member States, but a flexible “soft law” to provide a framework, not a level playing field since even the levels of tonnage tax paid for vessels of the same size differ across Member States.

“The decision of the European Commission regarding the Greek shipping taxation system and its statement that it will be used as a precedent for the assessment of other EU shipping regimes will seriously disrupt the shipping sector in the EU after twenty years of successful growth without formal complaints and negligible intra-EU reflagging or re-establishment of shipping companies.

“The European Commission must focus on the strategic, commercial and international dimension of the EU shipping industry in its diversity and its potential mobility, rather than concentrate on the nominal or juridical aspects of compliance with the letter of the SAG within the EU. Otherwise, the Commission will undermine the confidence of shipping entrepreneurs and may encourage relocation of companies outside Europe,” the union added.

The shipowners pointed out that the Greek shipping industry was never part of the debt problems of the Greek state, adding that the decision could undermine one of the Greek economy’s primary pillars at a time of exceptionally high unemployment and urgently needed growth prospects.

According to the Boston Consulting Group (BCG) and the Foundation for Economic and Industrial Research (IOBE) state, Greek shipping contributes over 7% of GDP, provides employment to 200,000 people and covers over 30% of the trade deficit.

Greece was given two months to inform the Commission whether it agrees to the measures proposed and to review which vessels are eligible under its system.