Shipping taxation: Extension of article 25 of L. 27/1975 and the tonnage tax regime also to bareboat charterers and ship lessees
Under the shipping tax provisions that were introduced by virtue of L. 4646/2019 (articles 59-61 thereof) and apply as of 1/1/2020, article 25 of L. 27/1975 was amended in order to include in its scope not only ship-owning companies but also bareboat charterers and ship lessees, on the rationale that they have essentially the same rights with the ship-owning companies in relation to the exploitation/management of the ship (apart from the right to dispose of the ship) and have been long considered as customary ways of ship exploitation.
Therefore, as of 1/1/2020, offices or branches of foreign companies dealing with the representation of bareboat charterer or ship lessee companies explicitly fall within the scope of the tonnage tax regime.
In addition, two new articles have been introduced to L. 27/1975, namely articles 26b and 26c, which provide for the following:
Article 26b extends the rights and obligations (which arise from the exploitation of ships and their tax treatment under the tonnage tax regime) of the ship-owning companies subject to the tonnage tax and their ultimate shareholders or partners up to the level of the UBO, to bareboat charterer companies and ship lessees as well as their ultimate shareholders and partners up to the level of the UBO. However, ship leasing companies are explicitly excluded from the tonnage tax regime.
Article 26c extends the rights (which arise from the exploitation of ships and their tax treatment under the tonnage tax regime) of shipowners or ship-owing companies and their ultimate shareholders or partners up to the level of the UBO, to bareboat charterer companies, ship lessee companies, companies owning the ship and their ultimate shareholders or partners up to the level of the UBO. This extension also covers the tax exemption applicable to dividends paid by holding companies, provided by article 35 of L. 814/1978, which was amended to include explicitly the case of bareboat charterers and ship lessees, provided of course the conditions of article 35 of L. 814/1978 are met.
Therefore, payment of the tonnage tax exhausts the tax liability for the shipowner company, the bareboat charterer company, the ship lessee company or the company owning the ship with foreign flag (which is managed or exploited by a Greek company or foreign company established in Greece under article 25 of L. 27/1975), with respect to any tax, duty, contribution or withholding for foreign-source income arising from the exploitation of the ship. Also, it exhausts the tax liability for any interposed holding company, up to the level of the UBO, as it extends to them the tax exemptions applicable to the distribution of profits or dividends deriving from the exploitation of the ship.
The tonnage tax is imposed on the ship-owning company or the bareboat charterer or the ship lessee or the foreign company owning the ship with foreign flag, which is managed by a Greek or foreign company established under article 25 of L. 27/1975. The management company is jointly liable with the abovementioned companies for the payment of the tonnage tax.
The calculation of the tonnage tax on the abovementioned companies is made in the same way as for the ship-owning companies, taking also into account the duration of the charter or the lease of the ship based on the chartering or leasing contract.
* 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.