The insurance premium tax endangers Germany’s status as an important shipping hub

In the fierce competition with rival shipping locations in and outside Europe, Germany cannot afford to impose special fiscal burdens on its shipping companies that are not found elsewhere in the world. This particularly applies to the imposition of insurance tax on premium payments for ship insurance policies (insurance premium tax).

This is an area in which German shipping companies generally have to shoulder a significantly higher tax burden than shipping companies in other shipping locations, the vast majority of which do not impose any taxes on premiums for marine insurance or only impose extremely low insurance premium tax rates. In addition, a tax rate of up to 19% on the insurance premium may also be imposed in Germany on the insurance of sea-going vessels even in cases where the vessels in question are not registered in German shipping registers at all.

This hits a major nerve in the German shipping industry: Due to the restructuring in the industry, German shipowners are now increasingly competing as ship managers for management agreements with international owners – because German shipping companies and ship managers are globally recognised for their high quality and regarded as experienced and skilled. However, imposing insurance premium tax on insurance policies of foreign-owned vessels threatens this business model.

This results in a tax burden that does not exist in this constellation anywhere else in Europe or the world. While many German shipping companies are endeavouring to keep their business in Germany, a tax burden that only exists in Germany puts them at a competitive disadvantage. VDR believes that these companies should be relieved from having to make such efforts and that the imposition of insurance premium tax in the maritime shipping sector as a whole must urgently be adjusted to a level that no longer leads to competitive distortions vis-à-vis foreign shipping locations and particularly those in Europe.