• Kegels & Co

Favourable tax regime for maritime transport is continued under new Belgian legislation of 3 July 20

The Belgian government is clearly aware that it is essential from a socio-economic point of view to continue to invest in the growth of the European fleet. With this in mind the new Law of 3 July 2018 amending the tax measures in favour of maritime transport was recently launched.

Since the European Commission decided on 6 November 2017 to extend the authorisation of fiscal aid to shipping companies for a further ten years, from 1 January 2013 to 31 December 2022, it was then time to amend the Programme Act on Taxation of Shipping of 2 August 2002 accordingly.

With these amendments, Belgium therefore wishes to make the most out of the favourable decision of the European Commission, by opening up access to the aid measures not only to vessels registered in the Member States of the European Union, but also to those flying the flag of a member state of the European Economic Area.

Main changes

1.- The extension of the encouragement of registration to the Member States of the European Economic Area is immediately apparent from the text of the renewed legal provisions. The terms 'European Union', 'Belgium' and 'Belgian flag' will therefore be given the term 'European Economic Area' as a worthy replacement. As a result of this amendment, Belgium is now acting more in line with the Community Guidelines (State Aid Guidelines) of Communication C (2004) 43 of the European Commission, which forsees flag coupling as a requirement to enable aid to be granted to shipping companies.

Under the current rules, any seagoing vessel flying the flag of a Member State of the European Economic Area, registered for the fiscal measure of flat-rate taxation of taxable profits based on tonnage, will then be able to benefit from a favourable tax regime. (Parl. St. 2017-18, Doc 54, 3103/001, 8)

2.- As in previous legislation, the Belgian fiscal aid measures, applying to shipping companies that meet the requirement of flag coupling, consist in determining the 'profits from shipping' on the basis of the net tonnage of a ship. This implies that companies under this system pay taxes directly linked to the actual operating capacity of the vessel concerned, irrespective of the profits actually generated.

Article 115 § 2, 1° Act 3 July 2018 still provides a definition of what is qualified as 'profits from shipping'. For example, 'profits from the operation of a seagoing vessel for the transport of goods or passengers' are still included, but this concept has in turn been broadened to include activities directly linked to such an operation. Thus, from now on, the essential obligations associated with the operation of a vessel (such as, for example, technical services subordinate to the main activity), as well as the ancillary activities associated with them, will now be classified as 'profits of maritime navigation'.

This amendment has been introduced so that the whole range of activities directly related to the transport of goods or persons would be grouped more together under this tax scheme.

3.- Subsequently, the intention was to provide Article 115 § 2, 2° of the Act of 3 July 2018 with a more defined scope of application. This article only has an effect for the benefit of ship managers. In order to better highlight this aspect, point (b) of this provision omits the concept of 'commercial management' from the current legal provision. In fact, under Belgian practice, there is no ship management company which manages a ship for the account of a third party exclusively on a commercial basis (without crew and technical management), using the net tonnage tax system.

Of course, the requirement to link the flag of a ship to a Member State of the European Economic Area has also been extended to ship management companies on a number of occasions, since the ship no longer has to be managed in Belgium to a large extent by the companies in order to be able to 'benefit' from the system, but its management in the European Economic Area is considered sufficient. (As required by the European guidelines.)

4.- In Article 119 § 1 of the Act of 3 July 2018, the lump sums that will reflect the 'profits of the taxable period from shipping' are still included.

Once more, the term 'European Union' should be replaced by the term 'European Economic Area’.

In addition, the amending act reintroduces paragraph 2 of this article. This paragraph distinguishes the period before 1 January 2018, for which the exemption of capital gains and the non-deductibility of capital losses acquired and realised during accession to the net tonnage tax scheme remains the rule. The period starting on 1 January 2018, on the other hand, will require taxpayers to declare the net tonnage and the added value of the vessel in their tax return when they join the scheme. Paragraph 3 of the relevant article therefore provides a definition of what should be indicated as 'capital gain', namely the market value of the ship at the time of accession to the favourable tax regime, from which the investment value or the purchase value should be deducted.

The approach to 'capital losses on seagoing vessels', on the other hand, remains unchanged, with the result that these are deemed to form part of the flat-rate profit, as determined in accordance with Article 119 § 1 of the Act of 3 July 2018.

5.- Finally, Article 124 of the Programme Act of 2 August 2002, as recently amended by the Act of 3 July 2018, stipulates how the taxable profit from the management of seagoing vessels on behalf of third parties is to be determined on a flat-rate basis.

In principle, Article 124 § 6 provided that the article applies only to taxpayers who manage ships on behalf of third parties, of which at least 75% are registered in the Belgian Register of Shipping.

In accordance with the vision on the harmonisation of European legislation that the Act of 3 July 2018 seeks to promote, the words 'Belgian Register of Shipping' had to be replaced by the 'shipping register of a member state of the European Economic Area'. This change was made for the same reasons as those set out in the above paragraphs.


It is clear that Belgium has grasped the occasion, created by the European Commission's approval of 6 November 2017, to make the aid measures relating to fiscal measures for seagoing vessels effective until 31 December 2022, to amend its legislation and to bring it more into line with the European guidelines that exist for this purpose.

This then makes it possible for shipping companies with ships flying the flag of a member state of the European Economic Area to join the favourable Belgian system of 'net tonnage tax'.

This, in turn, should help to encourage shipping companies to register their ships in a Member State of the European Economic Area, which will allow us, as a European continent, to see an increase in our fleet.

If you want more information on the Belgian Act of July 3th 2018, please contact info@kegels-co.be