The Commission has decided to authorise an amendment of the Irish tonnage tax related to time charter rules.

We first reported this issue in January of 2008. At that time the Commission had opened an investigation into changes planned by Ireland to its tonnage tax regime, i.e. the flat-rate tax regime based on the tonnage of ships.

In 2002 the Commission approved the Irish tonnage tax scheme until the year 2012.In 2007, the Irish authorities notified their intention to modify the ‘time charter’ rules laid down in that regime retroactively from 1 January 2006.

A “time-chartered” ship is chartered with crew for a period of time. The Irish tonnage tax regime had allowed for a ratio of 1 owned to 3 time-chartered ships (1:3). The modification to the Irish tonnage tax regime proposed to allow for a 100% time-chartered fleet to benefit from the scheme. Although the 2004 guidelines do not impose such restrictions, the Commission had only allowed tonnage tax schemes with a time charter ratio of (1:3) or (1:4).

The Commission approval means that for every owned vessel a company may have 10-time chartered vessels that will be allowed to benefit from the Irish tonnage tax provided that every time chartered ship is either:

• registered in a Community or EEA maritime register or
• its crew management and its technical management are carried out on the territory of the Community or the EEA.

Further information is available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/319&format=HTML&aged=0&language=en&guiLanguage=en.