Greece is overhauling the way it charges income from shipping to align it with European Union rules.
A temporary doubling of the country's tonnage tax, introduced five years ago during the height of Greece's debt crisis, is going to be replaced with a new 10% tax on shipping dividends.
The move was revealed by Theodore Veniamis, president of the Union of Greek Shipowners (UGS), in a speech released today.
The new charge applies to natural persons with tax residency in Greece who repatriate dividends from shipping income received from ship owning companies registered abroad.
Such dividends have been hitherto tax-free. This has been a major stumbling block in ongoing talks between Greece and the European Commission, the EU’s executive, which has been pushing Athens on the issue.
The 10% dividend tax will be of indefinite duration, as opposed to the tonnage tax doubling, which was temporary in nature, Veniamis said.
"That decision provides renewed proof of our industry’s responsibility and unity, as well as its strong commitment to continue its active presence in our homeland," Veniamis said in a speech on 6 February to fellow shipowners at UGS's annual assembly.
Similar to the tonnage tax doubling it replaces, the new dividend tax will be legally enacted through a memorandum of agreement between Greek shipowners and the country’s government.
Such a memorandum is necessary because Greece’s shipping tax regime is protected by the country’s constitution.
This means, effectively, that governments can’t change the shipping tax without shipowners’ agreement -- unless, of course, the constitution itself changes.
The imposition of the dividend tax is not a surprise and has been widely expected.
It may be the only way to settle a long dispute between the European Commission and Greece over the latter's shipping tax.
EU trustbusters launched a 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, threatening to take the country to the European Court of Justice (ECJ) if it failed to comply.
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.
UGS head Veniamis had repeatedly warned that any additional tax burdens could leave to an exodus of shipmanagement companies from Greece.
