• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 11/6/2013

France - Tonnage tax regime and compliance with EU law 

November 6: The European Commission today announced the launch of an investigation to consider whether the French tonnage tax regime complies with EU state aid rules.

Specifically, according to an EC release, the EC investigation will focus on whether the inclusion of time-chartered vessels sailing under non-EU flags is a “favorable fiscal regime” based on the taxation of the fleet tonnage.

The term “time chartering” refers to transport services that are provided with vessels and crew temporarily rented from other companies.


In May 2003, the EC approved the French tonnage tax regime. Under this system, shipping companies that opt for this alternative taxation may calculate their tax base for corporate income tax purposes using the tonnage of the fleet (rather than the actual profits of the company). As approved, the tonnage tax regime limits the eligibility of time-chartered ships not flagged in the EU.

After the EC adopted updated guidelines concerning state aid for maritime transport in 2004, France removed the specific flagging rules for time-chartered vessels without informing the EC (which only became aware of this change through its monitoring of approved state aid regimes).

At this time, the EC considers that specific limits on the eligibility of time-chartered ships that do not sail under the flag of an EU Member State must be retained (even though no EC guidelines contain any such explicit limits).

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