After six years of often acrimonious talks, Greece and European Union regulators are about to settle a dispute over the country’s shipping tax regime, the head of Greece’s shipowners said on Friday.
“[Talks] are in their very final phase,” said Theodore Veniamis, president of the Union of Greek Shipowners (UGS), in a press conference on the final day of Posidonia.
Veniamis didn’t reveal any details of what the outline of a deal could look like.
A senior shipping official from a European country told TradeWinds during Posidonia that a deal would probably be announced during the summer. It is expected to include the imposition of some sort of dividend tax on the profits of Greece-based shipping companies.
Such dividends are currently tax-free, based on the country’s 1975 tonnage tax law that enjoys special protection under the Greek constitution. This constitutional protection practically means that Greek governments have to seek shipowners’ consent before increasing their taxes.
Such an increase happened last in 2014, when the government and the UGS forged a “voluntary agreement” that temporarily doubled tonnage tax receipts, as part of nationwide austerity measures to avoid the country’s financial meltdown. The doubling is to expire this year.
A remark Veniamis made during the press conference suggests that a tax deal would be incorporated into Greek law in the form of just such a “voluntary agreement”. When Greek ministers and the EU conclude an agreement, the government and the UGS would have to “cooperate” to implement it, Veniamis said.
Retaining constitutional protection
The upside for Greek owners under this scenario would be that the constitutional protection of their tonnage tax regime would be upheld. Any future changes to it would therefore remain a complicated and time-consuming affair, if shipowners resist them.
EU trustbusters launched their probe into Greece’s tonnage tax regime back in 2012. In December 2015, they formally asked Athens to revise the way it taxes its shipowners. The EU’s proposed changes included reducing the number of vessels eligible for tonnage tax and abolishing shipowners’ exemption under Greek law from dividend and inheritance tax.
The EU had threatened to take Athens to the European Court of Justice (ECJ) if it failed to comply with its requests. That threat, however, doesn't seem to be on the table any longer.
Asked by TradeWinds last month on the status of his talks with the European Commission, Shipping Minister Panagiotis Kouroumplis said: “At this point, we have prevented the commission from bringing the case before the ECJ. ... I believe that everybody is coming to understand that we need to come to an agreement.”
The European shipping industry as a whole would be affected if Greek shipowners were forced to move to Asia because of tax reasons, Kouroumplis said. The UGS says its members already face a higher tax burden than many other European peers.
European Commission spokesmen have consistently declined to comment on the issue.
