A milestone in the development of the tax framework for shipping companies based in Germany was the introduction of the so-called tonnage tax in 1999 (determination of taxable income based on tonnage), for which the VDR had been advocating for a long time. Since then, this method of calculating taxes for shipping companies has been adopted by countries worldwide, and it has also been a success story in Germany thanks to the many positive economic impacts it has brought about. In 2009, a study commissioned by Germany’s Federal Ministry of Finance to evaluate the tonnage tax concluded that it is of vital importance to Germany’s status as a maritime hub and therefore indispensable. This assessment still holds true today.
The tonnage tax in accordance with § 5a of the German Income Tax Law (EStG) is not a tax in the true sense of the word, but rather an alternative method of determining taxable income that a shipping company can elect to use if certain preconditions are met. The law calculates the taxable income as a lump sum depending on the size (net tonnage) of a ship instead of its actual profit or loss.
The tonnage tax offers shipping companies a reliable, calculable tax framework and limits the potential tax burden to an internationally reasonable competitive level.