Shipping Aviation Tonnage Tax

What this file is

A sector overlay for shipping companies and aviation lessors / airlines.

Section 1 — Tonnage tax regimes

• [T1] Tonnage tax — Tonnage tax is a presumptive tax based on a vessel's net tonnage, replacing regular corporate income tax on qualifying shipping activities. EU regimes operate under the Community Guidelines on State Aid to Maritime Transport (2004, updated 2024). (Community Guidelines on State Aid to Maritime Transport (2004, updated 2024))

Key EU regimes

Key EU regimes (FA 2000 Sch 22; Wet inkomstenbelasting 2001 ch. 3; German tonnage tax §5a EStG; CGI Art. 209-0 B; Articolo 156 TUIR; TCA 1997 Part 24; Decreto-Lei 92/2018)

Country	Effective rate	Min flag requirement	Notable
Greece	Article 75 Constitution-protected; rates set per vessel type	Greek flag (extensive Greek-flagged fleet)	World's largest tonnage tax regime; 80% of Greek-owned vessels under Greek flag
Cyprus	EUR rates per 100 net tonnes per day, banded by size	EU/EEA strategic management in Cyprus	Available for ship owners, ship managers, charterers
Malta	EUR rates per 100 net tonnes; banded	EU/EEA flag; commercial management in Malta	Includes ship management; recent state aid extension
United Kingdom	Daily profit per 100 net tonnes (bands 0.6, 0.45, 0.30 GBP)	UK / EU / EEA flag minimum 60% of qualifying group	FA 2000 Sch 22; reformed 2024 to permit non-UK flag in some cases
Netherlands	Daily profit per 1,000 net tonnes (banded)	EU/EEA flag; commercial management in NL	Wet inkomstenbelasting 2001 ch. 3
Belgium	EUR per 100 net tonnes per day	EU/EEA flag	Belgian tonnage tax regime
Denmark	DKK per 100 net tonnes per day	EU/EEA flag	DIS (Danish International Shipping Register)
Norway	NOK per 100 net tonnes per day	NIS register	Norwegian Shipping Regime (NSR); requires distribution to shareholders to retain qualifying status
Sweden	SEK per 100 net tonnes per day	EU/EEA flag	Pre-EU State Aid approved
Germany	EUR per 100 net tonnes per day (banded)	EU/EEA flag	German tonnage tax §5a EStG
France	EUR per 100 net tonnes per day	EU/EEA flag	Tonnage tax regime CGI Art. 209-0 B
Italy	EUR per ton banded; tonnage tax option	EU/EEA flag	Articolo 156 TUIR
Spain	EUR per ton banded	EU/EEA flag; substantial Spanish presence	Régimen español de tributación por tonelaje
Ireland	EUR per 100 net tonnes per day	EU/EEA flag; commercial management in Ireland	TCA 1997 Part 24
Portugal	EUR per ton banded	EU/EEA flag	Decreto-Lei 92/2018

Asia-Pacific tonnage regimes

Asia-Pacific tonnage regimes

Country	Status
Singapore — MSI (Maritime Sector Incentive)	Various awards: MSI-AIS (vessel owners), MSI-SSS (international shipping), MSI-ML (ship management) — tax exemption or concessionary rate
Hong Kong	Tonnage tax discussed; no formal regime as of 2025 — half-rate profits tax for shipping activities
South Korea	Tonnage tax option
India	Tonnage tax option since 2004 (Income Tax Act Chapter XII-G)
Japan	Tonnage tax option since 2008 — limited adoption

US — special exemptions

• [T1] §883 IRC exemption — Foreign corporations operating ships / aircraft in international transport may be exempt from US corporate income tax on shipping/aviation income if home country provides reciprocal exemption (treaty or equivalent regime). (§883 IRC)

Section 2 — Eligibility tests

• [T1] Standard tests across regimes — 1. Vessel type — typically excludes fishing vessels, dredgers (some included), ferries below threshold, leisure 2. Strategic and commercial management — must be carried out in the regime jurisdiction (EU State Aid guidelines) 3. Flag minimum — vessels under EU/EEA flag must constitute a minimum % of the qualifying fleet (typically 60% for fleet extensions; relief if increasing tonnage) 4. Activity scope — international transport (some regimes include cabotage) 5. Lock-in — 10-year minimum tenure in tonnage tax regime; exit penalty for early withdrawal (EU State Aid guidelines)

Section 3 — Aviation lessor regimes

3.1 Ireland — global aircraft leasing hub

• [T1] Ireland aircraft leasing hub rules — - Standard 12.5% trading rate applicable to leasing activity if commercial substance - Section 110 SPV (TCA 1997 s.110): securitisation vehicle for aircraft lease finance; effectively neutral CIT but profit-extraction via interest - 8% accelerated depreciation on aircraft (TCA s.284) until disposal - Lessor activity is a trade for CIT and treaty purposes - Pillar Two QDMTT in force from 2024 — affects in-scope groups (TCA 1997 s.110; TCA s.284)

3.2 Singapore — Aircraft Leasing Scheme

• [T1] Singapore Aircraft Leasing Scheme — - ALS reduced rate (~8%) on qualifying aircraft leasing income; ALSI for aircraft investment manager - Maritime Sector Incentive equivalent in scope and benefit

3.3 Hong Kong — Aircraft Leasing Incentive

• [T1] Hong Kong Aircraft Leasing Incentive — - 8.25% concessionary rate on qualifying aircraft leasing - 50% gross income basis for asset depreciation

3.4 Bermuda

• [T1] Bermuda aircraft rules — - Aircraft Securitisation; flagging of aircraft via Cape Town Convention - New 15% CIT from 2025 for in-scope MNE groups

Section 4 — Cape Town Convention

• [T1] Cape Town Convention — The Convention on International Interests in Mobile Equipment (Cape Town, 2001) + Aircraft Protocol provides a unified framework for security interests in aircraft. Most major aviation finance jurisdictions are signatories. Affects creditor priority in lessee insolvency, not tax directly, but interacts with sale-leaseback structures. (Convention on International Interests in Mobile Equipment (Cape Town, 2001) + Aircraft Protocol)

Section 5 — IFRS 16 Lessor (aircraft and ships)

• [T1] IFRS 16 / US GAAP lessor accounting — Lessor accounting under IFRS 16 substantially preserved IAS 17 — finance lease vs operating lease distinction at lessor. Most aircraft / vessel leases are operating leases for lessor, with rental income recognised straight-line. US GAAP ASC 842: substantially same lessor model. (IFRS 16; US GAAP ASC 842)

Section 6 — Self-checks

• Tonnage tax regime entry conditions met (vessel type, strategic management, flag minimum)
• Qualifying vs non-qualifying activities separated (only qualifying gets tonnage; rest at regular CIT)
• 10-year regime tenure tracked
• EU State Aid Guidelines compliance (where applicable)
• Ship management vs ship owner status distinct (each may have own regime)
• Aircraft lessor activity meets commercial substance for treaty access
• Section 110 SPV substance documented (Irish lessors)
• Pillar Two ETR analysis — tonnage tax presumptive amounts produce ETRs well below 15%; top-up tax exposure
• Cape Town Convention security interest considered for finance lease structuring
• Output flags every [T2]/[T3] item for reviewer judgement

Section 7 — Disclaimer

Maritime and aviation sector taxation is highly specialised. Outputs must be reviewed by credentialed shipping/aviation tax practitioners. The most up-to-date version is at openaccountants.com.