Let’s talk about the main tax benefits for ships in the International Registry
by Berardo Lanci*
This article briefly outlines the main features of the favourable tax regime for ships registered in the International Registry, provided for by Legislative Decree no. 457/1997, as amended, inter alia, by the so-called “Aiuti-ter Decree”, approved by Legislative Decree no. 144/2022, which responded to the need to bring the Italian legal system into line with the content of European Decision C (2020) 3667-final of 11 June 2020, authorising the extension of the facilities.
In this regard, it should first be noted that ships engaged in the commercial activity of maritime transport, defined as the transport by sea of passengers or goods between ports, between a port and an offshore installation or structure, as well as those engaged in activities assimilated to maritime transport, such as assistance to offshore platforms, including fire-fighting services and the transport of materials and technical personnel, or deep-sea towing services, or cable-laying vessels and dredgers, or those engaged in scientific and seismological research, may be registered in the International Register. On the other hand, warships, government vessels on non-commercial service, fishing vessels and pleasure yachts are expressly excluded from registration in the above-mentioned register.
Photo by Tom van Oossanen
SHIPS LISTED IN THE INTERNATIONAL REGISTRY MAY BENEFIT FROM TAX ADVANTAGES EQUIVALENT TO WITHHOLDING TAX ON INCOME PAID
TO EMBARKED PERSONNEL AND INCOME TAX AT A RATE OF 20%
OF THE REALISED TAXABLE BASE.
The most important tax benefits granted to these units are indicated in Article 4 of the aforementioned Law Decree No. 457 and are represented by (i) the attribution of a tax credit equal to the individual income tax due on incomes from employment and self-employment paid to personnel on board vessels entered in the International Register, to be used for the purposes of paying withholding taxes on such incomes, thus enabling shipowning companies not to pay to the Revenue Agency the ordinary withholding taxes paid on the salaries paid to personnel on board (ii) provision that incomes deriving from the use of vessels registered in the International Registry are liable to taxation for corporate or individual income tax purposes for the 20% of its amount. In addition to these tax benefits, it is also provided an exemption from the payment of social security and welfare contributions for embarked personnel and the reduction of the insurance tax rate.
Photo by Alberto Cocchi
In order to fulfil the commitments entered into in the European Community, the scheme has been extended to ships registered in the States of the European Union or the European Economic Area or flying the flag of these States and territories.
As a result of the amendments introduced by the above-mentioned Decree-Law, these advantages are extended, within certain limits and subject to the fulfilment of specific conditions, to activities ancillary to those mentioned above and, from a subjective point of view, to shipping companies resident in Italy or non-resident but with a permanent establishment in Italy, using vessels registered in the registers of the States of the European Union or of the European Economic Area or flying the flag of the States of the European Union or of the European Economic Area and engaged exclusively in international trade in maritime transport or in activities similar to maritime transport. In addition, the benefit of the partial taxation of income referred to in point (ii) above has been extended to the activity carried out with vessels chartered on a time or voyage basis and to the activity of bareboat chartering, again subject to certain conditions being met by the persons concerned.
Above, M/Y AHPO, photo by Guillaume Plisson
(Tax benefits – Barchemagazine.com – September 2023)