Greece Accepts EU Changes to Shipping Taxation Rules

Greece has accepted measures to align its tonnage tax system with EU State aid rules, the European Commission announced on Monday.

The changes are designed to ensure that state support for Greece’s shipping sector complies with EU competition standards, while maintaining the sector’s competitiveness within the Single Market. The adjustments allow Greece to retain the tonnage tax, a system that lets shipping companies calculate taxes based on fleet size rather than corporate profits, offering predictability and fiscal advantages while complying with EU standards.

Key updates to the Tonnage Tax Framework

The updated framework includes:

– Removal of certain tax advantages, such as benefits on dividends and capital gains for shipping companies, as they are incompatible with EU market rules.
– Exclusion of tax exemptions related to inheritance laws, which were previously part of the scheme.
– Limiting tax benefits to companies directly involved in maritime transport (the movement of goods and passengers by sea), in accordance with EU’s Maritime Guidelines.

Photo source: Piraeus Port Authority

Cooperation between Greece and the EU

On November 14, 2024, Greece accepted the updated measures, concluding a multi-year cooperation process with the European Commission. This process began in 2015 when the Commission raised concerns about the breadth and beneficiaries of Greece’s tonnage tax scheme, which had been in place since 1975.

EU Maritime Guidelines allow Member States to support their shipping industries, but the aid must be narrowly targeted to ensure fair competition within the Single Market. Greece’s agreement reflects its commitment to aligning its policies with these rules.

Background on the review process

The Commission reviews “existing aid”—state aid established before a country joined the EU—through a structured dialogue. If a scheme is found non-compliant with EU rules, the Commission proposes measures for alignment. Greece’s acceptance marks the successful conclusion of this review process.

The changes ensure that Greece’s shipping industry continues to benefit from fiscal support while adhering to EU competition rules, focusing support on companies directly engaged in maritime transport.