The Belgian Shipping Policy
Peter Verstuyft
Managing Director
Royal Belgian Shipowners’ Association
http:// www.brv.be
Tel: +32/3 232.72.32
E-mail: info@brv.be
A.C.C.– Antwerpen- 25 november 2010
Background
Since the 1980’s, the shipping industry in Europe is
under acute threat by :
* Over-regulation, as this industry is poorly known.
Overreactions by government decision-makers to
accidents and the pressure of an ill-informed public
opinion contribute in no small way to this state of
affairs.
* The implications of European regulations on wages
and social security.
* A prohibitive tax-environment
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Result : Flagging out
• Worldwide, 2 out of 3 merchant vessels is registered
under a foreign flag
• Percentage of European controlled fleet, flying a foreign
flag in 1996 :
• Greece
60,5
• UK
75,1
• Germany
66,0
• Sweden
85,6
• Denmark
42,5
• Italy
36,3
• France
44,4
• Netherlands
37,9
• Belgium
96,5
• Spain
80,8
3
Belgian merchant fleet flagged out to
Luxemburg
-1988 : Flagging-out protocol
-1990 : Creation of a Luxembourg register for
Belgian vessels
- 1994 : Opening up of the Luxembourg register to
all nationalities
4
Strategic conclusions for Europe
European shipowners control about 41% of the world
fleet. If the EU succeeds in bringing back all those
vessels under European flags, Europe would become
the world’s number one maritime block.
– Enabling the EU to largely determine international
maritime policy.
– Preserving employment on board / on shore
– Preserving know-how and development of maritime skills
– Enhancing safety
5
“Orientations on State Aid” 1997
ensuring free market access to safe and
environment-friendly
vessels,
preferably
registered in Member States and with
European crew.
Keeping economic activities in the EU
 criterion of measurable benefit
Provide a normative framework based on a levelplaying field with respect to wage costs and social
legislation. Competition between Member States
must not be allowed to be unfair.
6
“Orientations on State Aid” 1997
Applicable to vessels under European flags
(meeting the economic link requirement)
Measures for the wage cost section
Maximum State Aids allowed in Europe :
– Zero-rated social charges (i.e. exemption) for employers and
employees
– Zero-rated withholding tax on occupational income (i.e. exemption)
7
EU State Aid Guidelines 1997
Applicable to vessels under EU flag
(meeting the economic link requirement)
Measures for the tax legislation section
Conditional upon:
transparent
accounting
• Maximum admissible State Aid in the EU:
– Zero-rated (i.e. exemption from) corporate tax
8
Stages of Belgian shipping policy
1990
1997
1999-2000
2002
Exemption of
personal income tax
for seafarers
2003
2004
RD
7/5/2003
A structural solution
=> The LUX register
Reduction of social
security and pension
funding costs for
seafarers
Law of
2/8/2002
Law of
27/12/2004
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The importance of a suitable shipping policy
for government
• Preserving and attracting economic activity and employment
• Ensuring shipping safety by dealing with ‘substandard
shipping’
• Keeping control and developing a positive image for Belgium
• Strategic & technological importance
• Shipping as a springboard for shipping-related industries
Losing a shipping cluster and the associated
know-how is an irreversible process
10
Importance of a suitable shipping policy to
shipowners
• A bona fide national register is commercially
quantifiable
• Constant input of highly qualified personnel
• Preserving maritime know-how
• Avoiding non transparant tax structures
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Strategic achievements
WAGE COSTS
Cost of crewmembers on board of ships flying the Belgian flag
Employers’
contribution
Income
tax
Employee’s
contribution
Actual cost
==> exempt
==> exempt for EU registered vessels
==> partially exempt (amount superior
to the pension level)
Net Income
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Strategic achievements
Corporate tax: a two-sided approach
The corporate tax for ocean-going shipping is subject to a twosided approach:
- Tonnage tax (lump-sum profit determination based on
tonnage)
- Conventional tax, i.e.
• Accelerated depreciation
• Exemption from tax on capital gains conditional upon
reinvestment
• Investment deduction amounting to 30% of the purchase price
•
•
Programme law of 2/8/2002 (O.J. of 29/08/2002 ed. 2) art 115 – art 127
Programme law of 27/12/2004 (O.J. of 31/12/2004 ed. 2) art 321 – art 331
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Strategic achievements
CORPORTATE TAXATION
Tonnage tax: an alternative for conventional
corporate tax
What is tonnage tax?
- The yearly corporate tax of the
shipowner is based on the net
tonnages of the vessels he actually
operates (V/C & T/C included up
to a ratio of 1:3) and not based on
the actual results of his shipping
activities
The profit of the taxable period resulting from ocean shipping is
assessed per vessel, per day and per 100 net tons on the basis of
the amount mentionned in the table below:
For the bracket up to 1000 net tons
For the bracket between 1000 and 10.000 net tons
For the bracket between 10.000 and 20.000 net tons
For the bracket between 20.000 and 40.000 net tons
For the bracket over 40.000 net tons
EUR 1,EUR 0,60
EUR 0,40
EUR 0,20
EUR 0,05
- Shipowners opting for tonnage
tax do so for 10 year periods
- Tonnage tax is flag/register blind
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Strategic achievements
Tonnage Tax: managed from Belgium
Purpose: avoiding brass plate companies
•
•
•
Law: Art 115§2.2°: “that is managed to a considerable extent in Belgium”
Elucidation of the Law: management as in art 115§2.2° refers to the main responsibility for the
activities, among others, non-exhaustively listed below:
– making agreements relating to the ship
– taking care of the ship’s supplies
– taking care of the ship’s maintenance
– entering into insurance contracts
– doing the bookkeeping
– meeting administrative formalities
– appointing Masters
“considerable extent” refers tot the fact that the taxpayer carries out most activities or that he has
them carried out
The RBSA has developed a self assesment matrix around 3 aspects of management (strategic &
commercial, technical and crewing) with 36 items
– For belgian registered & flagged vessels: majority of 2 of the 3 aspects + majority of the 36
items
– For non-Belgian registered vessels: majority of all 3 aspects + majority of the 36 items
Caveat: matrix serves as a guide only and the final decision lies with the IRS. When in doubt the
Owner can always apply for a “ruling”.
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Strategic achievements
FLAGSTATE GOVERNANCE
“Flag State Contact Group” ensures permanent consultation
between the authorities and the shipowners
Common commitment, supported by “risk based flag state
response”-tool
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Did it work ?
Percentage of controlled fleet, flying a foreign flag
(Percentage of total world fleet)
1996
2009
Greece
60,8
(17,4)
68,8
(15,33)
UK
75,1
(3,11)
63,9
(2,80)
Germany
66,0
(2,66)
83,4
(9,50)
[CYPRUS]
Sweden
85,6
(2,15)
76,6
(0,67)
[NO TT]
Denmark
42,5
(1,85)
62,2
(2,86)
[DIS]
Italy
34,3
(1,77)
34,9
(1,79)
France
44,4
(1,14)
54,5
(0,59)
Netherlands
37,9
(0,85)
49,8
(0,76)
Belgium
96,5
(0,63)
53,3
(1,22)
Spain
80,8
(0,50)
64,9
(0,40)
2009 – ranking UNCTAD
[FIS]
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Evolution of the student population at the
Maritime Academy
800
700
600
500
400
300
200
100
0
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Total Economic Impact
Shipping cluster: development of total added value 2001-2007
toegevoegde waarde 2007
toegevoegde waarde 2004
koopvaardij (direct)
koopvaardij (indirect)
toegevoegde waarde 2001
sleepvaart (direct)
sleepvaart (indirect)
waterbouw (direct)
waterbouw (indirect)
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Total added value created by the cluster grew from € 930 million in 2001 to
slightly over € 1.3 billion in 2004, reaching almost € 2.0 billion in 2007
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The New Belgian Shipping Policy
Development of the merchant fleet controlled from Belgium
16000
14000
12000
10000
DWT vessels foreign flag
8000
DWT vessels national flag
6000
4000
2000
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: UNCTAD Review of Maritime Transport, 2001-2007 (based on data from Lloyd’s Register / Fairplay)
Since the introduction of the new policy vessels have been returning to the Belgian flag.
Moreover the total fleet controlled from Belgium has continued to grow.
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Royal Belgian Shipowners’ Association
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Impact of Belgium’s new shipping policy
Maintenance of decision-making power in Belgium
- The new policy has generated a new drive
- The risk of key players leaving Belgium has been reduced to a minimum for
the next few years (almost comprehensive re-flagging as well as new players)
A fleet under the Belgian flag
- The tonnage tax has brought security and significant re-flagging / flagging-in
- The flag has become competitive within Europe (with Denmark, Germany, the
Netherlands and the UK)
- Training has received a new impetus (with the largest body of students in
25 years at the maritime academy); enrolment has grown by 50% since
2001
Economic impact
- Employment (total/preservation in Belgium)
- Added value doubled in 5 years time
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Belgium is not Europe’s Liberia
Aim:
• Structural growth of the Belgian merchant marine
• Developing new shipping activities
Rationale:
• Creating (direct & indirect) added value as well as (direct & indirect) jobs
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