The European Commission has closed an in-depth investigation opened in 2013 to examine whether changes to French tax rules for maritime companies were in line with EU state aid rules after France offered commitments addressing the Commission's concerns. The Commission had concerns that also giving favourable fiscal benefits to certain vessels sailing under non-EU flags would run counter the objectives of EU maritime transport policy. France has now committed to ensure that French tonnage tax payers flag at least 25% of their tonnage in the EEA. This addresses the Commission's concerns.
In May 2003, the Commission originally approved the French tonnage tax scheme. This scheme allows shipping companies to be taxed on the basis of the tonnage of the fleet rather than the actual profits of the company. The scheme limited the eligibility of time chartered ships not flagged in the EU (“time chartered” vessels provide maritime transport services with vessels and crew temporarily rented from other companies). Such ships could not constitute more than 75% of the fleet of a tonnage tax payer. This scheme was in line with the then applicable 1997 EU guidelines on state aid to maritime transport, which aimed to enhance the competitiveness of shipping companies facing competition from non-EU businesses and boost jobs in the sector.
After the adoption of the Commission's updated guidelines on State aid to maritime transport in 2004, France removed the specific flagging rules for time-chartered vessels without informing the Commission.
In November 2013, the Commission opened an in-depth investigation and invited interested parties to submit comments on the reformed measure, because it considered that specific limits on the eligibility of time chartered ships that do not sail under the flag of a Member State should be maintained. Having examined the submissions received, the Commission came to the conclusion that so far no tonnage tax beneficiary in France has had more than 75% of its fleet composed of time chartered vessels flagged outside the EU or the EEA. The removal of the specific flagging rules therefore did not yet have any effect in practice. At the same time, the Commission also found that there was no guarantee that this would remain the case in future as no minimum EEA flagging requirements were foreseen for new entrants. As a result, a newcomer company whose fleet was 100% composed of non-EEA time-chartered vessels would be able to benefit from the tonnage taxation.
The Commission considered that this was not in line with the 2004 Maritime Guidelines. Even if the Guidelines do not impose specific limitations on time charterers (contractually, time-charterers are maritime transport service providers) the Commission has always required in its case practice that time charterers wishing to benefit from tonnage tax contribute to the Guidelines' objectives of preserving a minimum maritime know-how within the EU/EEA or to the objective of promoting EU/EEA flagging of vessels.
To address the Commission's concerns, the French authorities have therefore committed to require from all the French tonnage taxpayers that at least 25% of their tonnage is EEA flagged. The Commission has accepted this commitment and has therefore closed its investigation.
The non-confidential version of the decision will be made available under the case number SA.14551 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.