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3 August 2018

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Portugal New Tonnage Tax Scheme Approved

On 20 July 2018, the Portuguese president promulgated Decree 223/XIII authorizing the government to introduce the country's new tonnage tax regime, which was approved by parliament on 22 June. Key points of the scheme include:

  • Shipping companies may opt to pay taxes on the basis of the net tonnage of their shipping fleet operated in maritime transport activities rather than on the basis of their taxable profits, including on:
    • Core revenues from maritime transport activities, such as cargo and passenger transport;
    • Certain ancillary revenues that are closely connected to shipping activities (which are capped at a maximum of 50% of a ship's operating revenues); and
    • Revenues from towage and dredging subject to certain conditions;
  • The taxable income amount is based on daily rates of EUR 0.25 to 0.75 per 100 net tonnes depending on the total net tonnage;
  • Startups are provided a 50% and 25% reduction in the tax base for the first two years of operations;
  • Ships exceeding 50,000 net tones that meet certain environmentally-friendly conditions are provided a 10% to 20% reduction in the tax base; and
  • Seafarers employed on ships that are eligible under the tonnage tax scheme are exempt from paying personal income tax and benefit from reduced social security contributions (4.1% and 1.9% for employer and employee contributions, respectively).

The tonnage tax regime will apply for a period of ten years effective from 1 January 2018.

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