Portuguese Tonnage Tax

The Isle of Man Shipping Registry – An Innovative Approach

Isle of Man Shipping Registry

Advisors often need to guide clients on the most suitable jurisdiction to flag an owner’s vessel. Historically, advisors have preferred tried and tested jurisdictions, but in today’s competitive world there is increasing importance on other issues such as jurisdiction perception, international transparency, time differences, different legal systems, expertise and growing costs associated with certain jurisdictions.

Criteria to Select a Suitable Flag to Register a Vessel

“Best practice” to select a suitable flag would generally include the following criteria:

  • Strong economic international standards – a minimum ‘A rating’.
  • Robust legal and construction standards.
  • A commercially run register – emphasis on service and response.
  • A strong performance in the areas of safety, security and environmental protection.
  • A jurisdiction that is White Listed by the Paris & Tokyo Memorandum of Understanding (Paris/Tokyo MoU) – and low risk rating.
  • A jurisdiction strong on reputation, compliance and transparency.
  • Low registration costs, simplified bureaucratic procedures and minimal taxes.

What Additional Advantages Does the Isle of Man Register Offer?

The former Director of the Register in the Isle of Man once said “The Isle of Man used to be the best register you have never heard of”, but that has changed. It is clear the Isle of Man flag has become recognised within the industry as one of the leading international registers for quality, efficiency and innovation.

Whilst there is still a lot of uncertainty around Brexit, it has previously been pointed out that “the Isle of Man’s position in the merchant shipping world is very clear, the Isle of Man is a British register and will fly the British Ensign, but it is not recognised as an EU flag.” Consequently, the EU incentives in terms of tonnage tax and access to cabotage trades in Europe have never applied to the Isle of Man. The EU Maritime Directives have also not applied automatically. Therefore nothing really changes as far as the Isle of Man Register is concerned. The Isle of Man Register continues to hold a strong position as a British non-EU register, which operates as an international register and secures business through the financial and political stability of its jurisdiction. This might not be the same for all jurisdictions.

Over the past three decades the Register has grown substantially and benefited from further investment from the Isle of Man Government.  The Registry has sought to become one of the world’s leading Registers and targeted quality registrations in the process whilst aiming to increase efficiency and extend the service provided to owners.

The Ship Registry now has overseas representatives in China, Greece, Japan and Singapore.

Facts and Figures – the Isle of Man Register

The Isle of Man Ship Register can boast the following:

  • 17th largest Register in the world; gross tonnage 14 million.
  • 400 ships registered and 11,000 seafarers under its flag.
  • 24/7 emergency response by Principal Surveyors.
  • Lower costs on the majority of vessel sizes in comparison to Bahamas, Liberia, Marshall Islands and Panama.
  • In 2019 the Ship Registry was one of the first flags in the world to launch electronic digitally signed certification.
  • The Paris MOU produce a “White List” of the highest performing flag states in the world and in June 2019, the Isle of Man took the number one spot.
  • In December 2019, the Ship Registry was awarded “Best Ship Registry” for 2020 by World Commerce Review for the second year in a row.

Cost Competitiveness

Cost is understandably a topic of great importance to owners.

The Isle of Man Shipping Register provides a supportive function to the thriving financial services industry in the Isle of Man. The Register, therefore, does not need to act directly as a tax raising centre, which allows it to be more competitive.


The Isle of Man is a shipping centre with a maritime tradition. The Shipping Register is a commercial register with a very supportive Government and with vessels allowed to fly the British ensign. Registry staff have a strong technical, supportive and customer focused approach.

Additional Information

If you require any further information regarding the above article, please speak to your usual Dixcart contact or to Paul Harvey at the Dixcart office in the Isle of Man; advice.iom@dixcart.com      

Dixcart Management (IOM) Limited is Licensed by the Isle of Man Financial Services Authority.

Portuguese Tonnage Tax

The Portuguese Tonnage Tax and All The Benefits it Offers

The Portuguese tonnage tax and seafarer scheme was approved by the European Commission on 6 April 2018. This was in line with EU State aid rules, in particular the Guidelines on State aid to maritime transport. The Portuguese measures will enhance the competitiveness of the Portuguese shipping sector. Simultaneously, they will protect know-how and jobs in the EU maritime transport sector.

The law proposal had been presented by the Portuguese Government to Parliament before this date, and enactment is anticipated in the near future.

Portuguese Tonnage Tax System: Eligibility

The tonnage tax is not a tax but rather a means to determine relevant taxable income.

Entities liable to corporate income tax, carrying out eligible shipping activities, with a registered head office or place of effective management in Portugal, may opt to be taxed under this new tonnage scheme.

Application to the tonnage scheme will be subject to certain legal requirements as follows:

  • at least 60% of the respective net tonnage must fly a flag of a European Member State (EU) or an Economic European Area State (EEA) and be managed from an EU or EEA State;
  • in terms of chartering, the net tonnage of the ships under a charter cannot exceed 75% of the total fleet of the charterer and must comply with the flag and management requirements detailed above;
  • at least 50% of the crew of the relevant ships must be nationals from EU, EEA or Portuguese-speaking countries, except for very limited exceptional cases.

Tax Details: Portuguese Tonnage Tax Regime

Taxable income is calculated as a lump sum, depending on the size (net tonnage) of the ships, independent of the actual earnings (profit or loss), as per the schedule below:

Net TonnageDaily taxable income for each 100 net tonnes
Up to 1,000 net tonnes€ 0.75
1,001 – 10,000 net tonnes€ 0.60
10,001 – 25,000 net tonnes€ 0.40
Over 25,001 net tonnes€ 0.20

The tonnage tax can be applied to a shipping company’s:

  • core revenue from maritime transport activities, such as cargo and passenger transport;
  • certain ancillary revenue closely connected to shipping activities (which is capped at a maximum 50% of a ship’s operating revenue); and
  • revenue from towage and dredging, subject to certain conditions.

For more environmentally-friendly ships, companies can achieve an additional reduction of 10% to 20% of tax under the tonnage tax scheme.

Taxable profit assessed, as per the above schedule, is then subject to the standard rate of 21% corporate income tax (municipal surtax and state surtax also apply). No deductions can be offset against the taxable profit assessed under this scheme.

The proposed tonnage tax regime will be optional. However, participation in the scheme must be for a minimum 3 years, if commenced within the first 3 fiscal years of the introduction of the tonnage regime. After this initial period, subsequent participation must be for a minimum 5 years.

Scheme to Support Crew

The scheme exempts crew members employed on vessels eligible under the tonnage tax regime from paying personal income tax (IRS). A minimum of 90 days on board the vessel is required in each tax year, as well as meeting a number of other conditions.

The new scheme also allows the crew to pay reduced social security contributions; total rate of 6%, 4.1% paid by the employer and 1.9% by the member of the crew.

MAR – Madeira International Shipping Register

MAR is the fourth largest EU international shipping register. Ships registered with MAR qualify for the tonnage scheme. Madeira is an integral part of Portugal. In other words, Companies registered there enjoy a number of tax benefits which are guaranteed until at least the end of 2027.

MAR also permits bareboat charter registration. Therefore, MAR is very likely to be the preferred option for ship owners wishing to reflag their fleet in order to benefit from this new tonnage system.

In addition, the Madeira International Business Centre, of which MAR is a part, also offers several tax advantages to shipping companies, which can be combined with the benefits of this new scheme.

Additional Information

If you require additional information on this topic, please speak to your usual Dixcart contact, or to Carlos Santos at the Dixcart office in Madeira: advice.portugal@dixcart.com

redomicile a ship

Time to Redomicile a Ship? Why Malta Could be the Answer

Redomiciliation of a Shipping Company to Malta

Malta has established itself as a robust and safe maritime jurisdiction and has the largest European maritime flag registry.

It is possible to redomicile a shipping company from another jurisdiction to Malta, without liquidating the company in the country that it is being redomiciled from (Legal Notice 31, 2020).

A Summary of the Attractive Tax Regime Available to Ships Registered in Malta

In December 2017, the European Commission approved the Maltese tonnage tax regime for a period of 10 years, following a review of its compatibility with EU State Aid Rules.

The Maltese Shipping Tonnage Tax System

Under the Malta Tonnage Tax System, tax is dependent on the tonnage of the vessel or fleet belonging to a particular ship-owner or ship-manager. Only companies that are active in maritime transport are eligible under the Maritime Guidelines.

Standard corporate tax rules do not apply to shipping activities in Malta. Instead shipping operations are subject to an annual tax consisting of a registration fee and annual tonnage tax. The rate of tonnage tax reduces according to the age of the vessel.

  • As an example, a trading ship measuring 80 metres, with 10,000 gross tonnage, built in the year 2000, will pay a fee of €6,524 on registration and €5,514 annual tax thereafter.

The smallest category of ship is up to a net tonnage of 2,500 and the largest, and most expensive, are ships over 50,000 net tonnage. Charges are reduced for ships in the 0-5 and 5-10 year age categories respectively and are greatest for those 25-30 years old.

Please see IN546 – Maltese Shipping – The Tonnage Tax System and Advantages for Shipping Companies, for further information regarding this regime and additional advantages regarding the registration of a ship in Malta.

Conditions to Redomicile a Shipping Company to Malta

The following conditions need to be met:

  • the company is established under the law of an approved country or jurisdiction where those laws are similar in nature to company law in Malta;
  • the ‘objects’ of the company must be such that the company qualifies as a shipping organisation;
  • provisions in the law of overseas country enabling such countries to redomicile
  • redomiciliation is permitted by the company’s charter, statutes or memorandum, and articles or other instruments that constitute or define the company;
  • a request is submitted to the Malta Registrar for the company to register to be continued in Malta.

A request by a foreign company for registration to be continued in Malta, must be  accompanied by:

  • the resolution authorising it to be registered as being continued in Malta;
  • a copy of the revised constitutional documents;
  • a certificate of good standing or equivalent documentation relating to the foreign company;
  • a declaration by the foreign company to be registered as continued in Malta;
  • a list of directors and company secretary;
  • confirmation that such a request is permitted by the laws of the country or jurisdiction in which the foreign company has been formed and incorporated or registered.

The Registrar will then issue a Provisional Certificate of Continuation.  Within six months of this certificate being issued, the company must submit documentation  to  the  Registrar  that  it  has ceased to be a company registered in the country or jurisdiction where it had been previously established. The Registrar will then issue a Certificate of Continuation.

Additional Information

If you would like further information regarding the Malta Tonnage Tax System or the registration of a ship and/or yacht in Malta, please contact Jonathan Vassallo at the Dixcart office in Malta: advice.malta@dixcart.com or your usual Dixcart contact.

Maltese Cell Company

Using a Maltese Cell Company for the Registration of a Yacht or Aircraft

Extension of the Ability to Use a Cell Company in Malta

Shipping and Aviation Cell Company Regulations were issued in Malta, earlier this year. The purpose of these regulations is to provide the opportunity to use a new cell structure for companies operating in the fields of shipping and aviation.

Cell companies, for use in the insurance and securitisation sectors, have already been successfully established in Malta, under the Companies Act for Cell Companies. It was felt beneficial to extend this type of corporate structure to the shipping and aviation industry.

Benefits Cell Companies Offer

The definition of a cell, within the relevant Malta Companies Act, summarises the benefits available; a cell company creates ‘within itself one or more cells for the purpose of segregating and protecting the cellular assets of the company in such a manner as may be prescribed’.

Each cell is treated as a separate legal entity which allows for the segregation of assets and liabilities relevant to the individual cell, from the assets and liabilities of the non-cellular element, and from the other cells.

A cell company may have more than one cell and each cell is treated independently from any other cell forming part of the same cell company. A cell company therefore provides protection for cells, from the other cells within the same company.

Obligations Cell Companies Must Meet

Cell Companies are distinguished from other companies by their name, which must include the words; ‘Mobile Assets Protected Cell Company’ or ‘MAPCC’.

Companies with such a structure may be formed or constituted as a cell company to conduct shipping or aviation business. Alternatively, a company conducting such business can be converted into a cell company, if permitted to do so by its memorandum and articles of association.

The assets of a cell company can be cellular or non-cellular assets. Such assets consist of the cell’s capital and reserves, as well as all other assets attributable to the different cells.

A cell company may, in respect of any of its cells, create and issue shares, these are known as ‘cell shares’. The proceeds of the issue of this ‘cell share capital,’ will form the assets of the cell.

Cell companies must inform all third parties that they are dealing with a cell company, and that there are two regulations which specifically deal with creditors and the recourse available for creditors in relation to cellular assets.

Examples – How Aviation and Shipping Companies Can Use a Cell Company

There are numerous examples of how a cell company can be effectively used to segregate assets in the fields of aviation, shipping and yachting:

  • In relation to aviation, for example; one cell could own the plane, the second cell the engine, the third cell ‘aircraft management’ and a fourth cell might relate to the employees’ pension fund.
  • A similar, relatively simple example in relation to yachting, might be where one cell owns yacht A, the second cell owns yacht B, the third cell owns yacht C, and cell D owns the business matters in relation to ‘yacht management’.

Additional Information

If you would like further information regarding Malta Cell Companies and the opportunities that they provide and/or the registration of a ship, yacht or aircraft in Malta, please contact Jonathan Vassallo at the Dixcart office in Malta at advice.malta@dixcart.com.

Pleasure Boats in Malta

Hiring of Pleasure Boats in Malta – The Guidelines

The Malta Commissioner for Revenue has just published the guidelines that are to be used to determine the place of supply for the hiring of pleasure boats. These will be applicable, retrospectively, for all leases commencing on or after 1 November 2018.

These new guidelines are based on the fundamental VAT principle of ‘use and enjoyment’ and provide the mechanism to determine the amount of VAT to be paid on the lease of a pleasure boat.

The lessor (the party leasing the asset) needs to obtain from the lessee (the party paying for  use of the asset), reasonable documentation and/or technical data to determine the effective use and enjoyment of the pleasure vessel both within and outside EU territorial waters.

By using a ‘Preliminary Ratio’ and an ‘Actual Ratio’ the lessor will be able to apply VAT to the proportion of the lease relating to effective use and enjoyment, within EU territorial waters.

Additional Information

The Dixcart office in Malta has extensive experience in assisting with yacht ownership and registration in Malta. Please speak to Jonathan Vassallo: advice.malta@dixcart.com or to your usual Dixcart contact.

Why Use The Azores

Why Use The Azores (Portugal) for Yacht Importation?


The Archipelago of the Azores is composed of nine volcanic islands and is situated in the North Atlantic, about 1,500 kilometres west of Lisbon. These islands are an autonomous region of Portugal.

What Advantages are Offered by the Azores for Yacht Importation into the EU?

  • The standard rate of Portuguese VAT is 23% but the Azores benefits from a reduced VAT rate of 18%.

In relation to the EU as a whole, the Azores has the second lowest rate of VAT within the EU (equal to Malta), with only Luxembourg enjoying a lower rate at 17%.  The low rate of VAT is a major reason why the Azores continues to be a popular location for yacht importation into the EU.

The Azores also provides a geographical advantage as it is on the route used by yachts crossing the Atlantic, from the US and the Caribbean, to Europe.

Dixcart: Yacht Importation Services Using the Azores

Dixcart has extensive experience importing yachts through the Azores.

The yacht must physically travel to the Azores and it must  be moored there for two to three working days, to enable customs clearance to take place.

Dixcart undertakes the preparation work at their office in Madeira and then organises for the appropriate professionals to travel to the Azores, to be there at the correct time and for the relevant number of days. These professionals assist with the customs clearance procedures and payment of VAT.

Steps and Procedures

Four steps take place:

Step 1: Application for a VAT number for the yacht owning company, as a Portuguese taxpayer


  1. Relevant documents to prove the yacht owner’s identity.
  2. Power of Attorney from the yacht owner in favour of the relevant Dixcart company. This company will apply for a VAT number and will be registered as the yacht owner’s fiscal representative, for VAT purposes, with the Portuguese Tax Authorities.

Step 2: Preparation of the relevant VAT and other customs forms


  1. ‘Declaration of Conformity’.
  2. ‘Bill of Sale’ and related invoices.
  3. Customs in the Azores will make their own evaluation as to the value of the yacht.

Step 3: Importation

The Azores Customs Authority will:

  1. Survey the yacht.
  2. Calculate the applicable VAT on importation, and any other relevant charges.
  3. Implement the customs clearance.

Step 4: VAT payment

The Portuguese tax representative of the yacht owner (provided by Dixcart) will pay the VAT applicable on the yacht importation and will receive the following items:

  1. ‘Declaration of Importation’. This document confirms customs clearance for the yacht and details of the relevant VAT payment. It must be kept on board the yacht at all times.
  2. Receipt of payment.

Additional Information

If you require additional information regarding yacht importation using the Azores, please speak to your usual Dixcart contact or to Carlos Santos at the Dixcart office in Madeira: advice.portugal@dixcart.com.

Portugal Armed Guards

Portugal Armed Guards Allowed Onboard Portuguese Flagged Vessels, Where Piracy is Prevalent

New Law

On 10 January 2019, the Portuguese Council of Ministers approved a law to allow armed guards to sail on Portuguese flagged vessels.

This measure is long-awaited by the International Shipping Registry of Madeira (MAR) and by ship owners registered within it. The increase in financial loss due to hijackings and ransom demands, and the risk to human lives, as a result of hostage taking has led shipowners to demand such a of measure. Ship owners prefer to pay for additional protection rather than being potential victims of piracy.

Measures to Address the Increasingly Frequent Problem of Piracy

Unfortunately, piracy now constitutes a major threat to the shipping industry and it is recognised that the use of armed guards on board vessels is crucial to the decrease the number of piracy incidents.

The regime to be established by this law enables shipowners of Portuguese flagged vessels to hire private security companies, employing armed personnel to be on board ships, in order to protect these vessels when operating in areas of high piracy risk. The law also provides for the option to hire security contractors headquartered within the EU or EEA to protect Portuguese vessels.

Portugal will be joining the increasing number of ‘Flag States’ that allow the use of armed guards on board. This step is therefore logical and consistent with the actions being taken by a number of other countries.

Portugal and Shipping

As recently as November 2018 the Portuguese tonnage tax and seafarer scheme was enacted. The objective is to encourage new shipping companies by offering tax advantages, not only to shipowners, but also to seafarers. For more information regarding the advantages of the new Portuguese tonnage tax, please refer to the Dixcart Article: IN538 The Portuguese Tonnage Tax Scheme For Ships – What Benefits Will It Offer?.

The Madeira Shipping Registry (MAR): Other Advantages

This new law is designed to enhance Portugal’s shipping registry and Portugal’s second shipping register, the Madeira Registry (MAR). It is part of a comprehensive plan to develop the country’s entire maritime industry. This includes companies and individuals owning ships, shipping related infrastructure, maritime suppliers and those working in the maritime industry.

The Madeira Registry is already the fourth largest international shipping register within the EU. Its registered gross tonnage is over 15.5 million and its fleet comprises vessels from the largest shipowners such as APM-Maersk, MSC  (Mediterranean Shipping Company), CMA, CGM Group and Cosco Shipping. Please see: IN518 Why the International Shipping Register of Madeira (MAR) is so Attractive.

How Can Dixcart Help?

Dixcart has extensive experience working with the owners and operators of commercial vessels as well as pleasure and commercial yachts, registered with the Portuguese Registry and/or MAR. We can assist with the permanent and/or bareboat registration of vessels, re-flagging, mortgages and the establishment of corporate owning and/or operational structures for the holding or management of vessels.

Additional Information

If you require additional information on this topic, please speak to your usual Dixcart contact, or to Carlos Santos at the Dixcart office in Madeira: