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Tonnage tax and seafarers taxation
Tonnage tax and seafarers taxation
Danish tonnage tax regime
In 2002, Denmark introduced a new tonnage tax regime for shipping companies for this line of business that replaced the usual company tax system. The Danish tonnage taxation scheme is based solely on the total tonnage a shipowner operates. This means that taxation is independent of earnings or losses that may be incurred in the given taxation period. The tax system is approved by the EU Commission.
The Danish tonnage tax regime forms a very important part of the overall economic framework conditions that make registration in the Danish International Ship Register (DIS) attractive.
To which companies does the scheme apply?
The tonnage taxation regime can be used by limited shipping companies registered in Denmark, EU shipping companies with a permanent establishment in Denmark and all companies where the management is located in Denmark provided that the company is liable to company taxation in Denmark.
Shipping companies can choose to be taxed on the basis of the total actual tonnage they operate or alternatively, on the basis of ordinary income taxation. The choice will be binding for a period of 10 years.
For all companies, it is a prerequisite that they actively operate shipping business. However, it is not necessary for a company to be engaged exclusively in shipping as a distinction of the taxable income will be made.
What is the level of taxation?
The taxable income for companies is in general subject to corporate income tax at the ordinary rate of 25 %.
However, under the tonnage tax regime the taxable income is calculated by multiplying a deemed income per 100 tonnes of net tonnage by the number of days a vessel is controlled by the shipping company, regardless of whether or not the ship is in actual operation. The deemed income per 100 tonnes per day ranges from DKK 2,2 to 7,8, depending on the total tonnage operated. No deductions, including depreciation of the vessels, are permitted.
Taxation of seafarers in the Danish International Ship Register (DIS)
Like other countries, Denmark has chosen tax incentives as a means of reducing manning costs. The seafarer is thus in more general terms exempted from paying income tax of the DIS salary. As a consequence collective agreements or individual contracts of agreement will be able to set wages as net wages.
For more information contact the Danish tax authority: SKAT by phone +45 7222 1818 or through the tax authority website.
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