The European Commission has sent to Greece a set of proposals to ensure that state support to the maritime sector in Greece complies with EU state aid rules.

The commission found that current provisions may breach EU state aid rules by allowing shareholders of shipping companies to benefit from favorable tax treatment that should be reserved for maritime transport providers. The commission is concerned that favorable tax treatment is also extended to maritime sector intermediaries and operators of ships, which do not provide maritime transport services.

EU state aid rules establish how member states can support maritime transport providers, without unduly distorting competition. The maritime guidelines enable member states to tax shipping companies on the basis of the tonnage of the fleet rather than the company’s profits. These measures were introduced to encourage EU ship-owners to flag ships and carry out ship-management activities in the EU, rather than relocate those activities outside the EU.

The commission’s concern is that the Greek tonnage tax system is not well targeted and benefits the shareholders of shipping companies as well as companies other than maritime shipping companies, beyond what is permitted under the maritime guidelines. The commission has therefore asked Greece to review which vessels are eligible under its system and to exclude fishing vessels, port tugboats, and yachts from the preferential regime. Operators of those vessels should be subject to the standard income tax.

Preferential tax treatment, according to the commission, should also be removed for insurance intermediaries, maritime brokers, and other maritime intermediaries as well as the shareholders of shipping companies, none of which conduct genuine maritime transport activities.

The commission’s requests do not concern the operation of bulk carrier and tanker vessels. These can continue to benefit from a tonnage-based taxation instead of profit-based taxation.

Greece now has two months to inform the commission whether it agrees to the measures proposed, in which case it would need to amend its national rules.