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Portugal

10 May 2018

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Portugal to Introduce Tonnage Tax Scheme

Following the State aid approval from the European Commission in April 2018, Portugal is moving forward with Law proposal no. 111/XIII, which is currently before parliament and provides for the introduction of a tonnage tax scheme for the shipping industry. 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).

Subject to final approval in parliament, the tonnage tax regime will apply for a period of ten years effective from 1 January 2018.

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