Overview of the shipping tax regime in Greece
Tonnage Tax Regime
The Greek tonnage tax regime has been established as a favorable system of taxation of shipping activities. This tax system enables ship owners to plan their business activity in the long term without increased tax burdens, while it also contributes to keeping the cost of operating ships at a competitive level. In general terms, according to the tax provisions of Law 27/1975, the tonnage tax is payable by shipowners or ship-owning companies of ships under Greek flag and exhausts the tax liability of the shipowner, as well as their ultimate shareholders, up to the level of the private individual shareholder of a national or foreign company for any income arising from the operation and exploitation of ships.
In addition, the tonnage tax is provided for the ships under foreign flag as well, provided that these ships are managed by Greek or foreign companies established in Greece under the provisions of Article 25 of Law 27/1975. The tonnage tax is calculated using the same criteria, rates and scales as applicable to ships registered under the Greek flag. In specific, the gross tonnage is calculated by multiplying coefficient rates by each scale of gross registered tonnage and this taxable tonnage is subsequently multiplied by age-related rates. A credit for the tonnage tax paid abroad is provided.
Further, under recent shipping tax provisions which were introduced by L. 4646/2019 and entered into force as of January 1, 2020, the Greek tax legislator expanded the tonnage tax regime to bareboat charterers and ship lessee companies by amending Article 25 of L. 27/1975 and by introducing additional Articles.
In detail, pursuant to Article 25 of L. 27/1975, offices or branches of foreign companies or Greek companies of any type or form, exclusively engaged in the management, exploitation, chartering, insurance, average (damage) settlements, brokerage regarding purchase, chartering, shipbuilding or insurance, of ships under the Greek or foreign flag, of gross tonnage over five hundred (500) shipping tons, excluding passenger ferries and commercial vessels which perform domestic voyages, as well as the representation of ship-owning companies or bareboat chartering companies or ship lessee companies or companies engaged in the above-mentioned shipping activities, may be established in Greece upon application which is filed before the Greek Ministry of Maritime Affairs, on the basis of a license/permit granted via a Decision issued by the Minister of Maritime Affairs and published in the Government Gazette. The decision shall specify the type of services provided by the office or branch and, in general, the conditions of their operation.
The establishment license shall be valid for five (5) years and may not be revoked before the expiry of this period, which shall commence upon its publication in the Government Gazette. During that period, the conditions under which the establishment license was granted may not be altered without the consent of the company. After the five-year period, the establishment license shall be renewed automatically for an equal period, without the need for the issuance of a new Ministerial Decision, provided that at the time of its expiry the general and specific conditions in force at the time of issue of the original establishment license continue to apply. In the event of infringement of any of the conditions of the establishment license by the company to which it was granted, the license may be revoked by Decision of the Minister of Maritime Affairs.
Therefore, from tax years as of January 1, 2020, the payment of tonnage tax exhausts any further tax liability with respect to any tax, tax duty, contribution or withholding tax for foreign-sourced income arising from the ship’s exploitation, not only for the shipowner company, but also for the bareboat charterer company, the ship lessee company or the company owning the ship under a foreign flag and managed by offices or branches or companies established through the provisions of Article 25 of Law 27/1975.
The same exemption from any tax, duty, contribution or withholding tax applies to the shareholders or partners of the above companies, up to the level of the private individual shareholders as well as their ultimate shareholders, on income earned in the form of distribution of net profits or dividends, either directly or through holding companies, irrespective of the number of holding companies interposed between the ship-owning company or bareboat charterer or ship lessee, or the company which owns the ship and the ultimate shareholder or partner.
Furthermore, the transfer from any cause of shares or units of domestic or foreign ship-owning companies owning ships under Greek or foreign flags, as well as holding companies that hold directly or indirectly the shares or units of the above-mentioned shipping companies – owners or bareboat charterers or ship lessees or companies which own the ship, is exempt from any tax.
The abovementioned managing offices/branches/companies shall be liable for the payment of the tax jointly and severally with the shipowner companies or the bareboat charterer companies or the ship lessee companies which have assigned to them the management of their ships. Where a shipowner company or bareboat charterer or ship lessee changes the management company to which it has assigned the management of one of its ships, the management company shall be liable for the payment of the tax due for the period during which it managed the ship.
However, it should be clarified that the management company mentioned above is a separate company (third party). So, the income from dividends obtained by the shareholders or the partners of the management company is taxed under the general income tax provisions (i.e. the tonnage tax regime and its applicable exemptions do not extend to the shareholders/ partners of the management company).
From year 2023 onwards, the tonnage tax regime is extended also to time charterers and voyage charterers. In specific, time and voyage charterers of fully equipped and crewed ships owned by other companies may be subject to tonnage tax, however this applies only on the condition that they are also engaged in ship-owning and bareboat chartering activities and provided also that a) at least 25% of their total fleet are ships under an EU/EEA Member State flag or b) that the ratio of their time charter or voyage charter ships that are not under an EU/EEA Member State flag does not exceed 75% of the fleet that is owned by them or bareboat chartered by them.
Contribution regime
In case that foreign shipowner companies, as well as bareboat charterer companies or ship lessee companies have been established in Greece through Law 27/1975, but their offices or branches in Greece or the Greek companies are engaged exclusively only in the chartering, insurance, average (damage) settlements, brokerage regarding purchase, chartering, shipbuilding or insurance, of ships under Greek or foreign flag, of gross tonnage over five hundred (500) shipping tons without any ship-management activity (i.e. the management of the ship is not carried out in Greece), the tonnage tax regime and the relevant tax exemptions/exhaustion as described above are not applicable, but a different tax regime applies (commonly known as the “contribution regime”) which entails the following:
Contribution of article 43 par. 1 of L.4111/2013:
A contribution is imposed on the total annual imported and converted into euro foreign exchange and the imported amount of euro and it is calculated as follows for tax years as of 2016 and onwards (Circular Ε.2113/2019):
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Tax rates in US dollars per gross tonnage of total capacity |
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| Total annual imported and converted into euro foreign exchange / and imported of euro ($) | Tax rate (%) | Contribution ($) | Progressive total annual imported and converted into euro foreign exchange and imported of euro ($) | Progressive total contribution |
| 200.000 | 7 | 14.000 | 200.000 | 14.000 |
| 200.000 | 6 | 12.000 | 400.000 | 26.000 |
| Excessive | 5 | |||
For tax years 2021 and onwards, the minimum contribution amount certified is equal to six thousand (6,000) US dollars annually.
Tax Exemptions and Benefits of article 25 par. 3 of L.25/1975:
The above offices or branches or Greek companies shall enjoy the following exemptions and benefits, provided that the following are covered by the importation of foreign exchange or euros:
- their annual operating expenses in Greece with an equivalent of at least fifty thousand (50,000) U.S. dollars; and
- all general payments in Greece on their own account or on behalf of third parties.
Tax Exemptions and Benefits:
- Exemption from any tax, duty, levy or withholding tax in favor of the State or any third party on their income earned from the above-described provision of shipping services.
- Exemption from the special tax on banking operations (ΦΚΕ) and from any stamp duty or any charge in favor of a third party, except for those concerning contracts, collections, and payments and, in general, any actions performed by the offices or branches or on behalf of the companies represented by them.
- A work permit shall be granted to any foreign personnel for a period of up to two (2) years. This permit may be extended every two (2) years without limitation and provided that the establishment license is valid.
- Registered letters may be posted abroad without being presented to the Post Office for inspection, provided that the envelope bears the name of the sender, the stamp of the company and the initials of the representative of the office or branch established.
Dividend tax of article 43 par. 5 of L.4111/2013:
Dividend tax at a rate of ten percent (10%) is imposed on dividends received by an individual who is a tax resident in Greece from the following:
- The foreign companies of any type or form, which maintain offices or branches established in Greece in accordance with article 25 of Law 27/1975.
- The Greek companies that have been subjected to article 25 of Law 27/1975.
* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.