Posted on: 3 July 2024
Romain Farnoux, lawyer in Reed Smith’s Transportation Industry Group, commenting on the proposals to abolish the French Tonnage Tax, said: “The potential abolition of the French tonnage tax regime, a favourable tax framework for shipping companies, is causing significant concern within the industry as early legislative elections reignited a debate started with the Finance Bill for 2024. The French tonnage tax regime also supports thousands of jobs and encourages shipowners to register under the French flag, bolstering national maritime influence and economic activity.”
“The French Court of Auditors estimates a potential 9.4 billion euro loss in tax revenues for 2022-2023 due to the tonnage tax regime, sparking debate on whether abolishing it would indeed boost public revenues.
“Many believe that eliminating the tonnage tax could drive shipowners to relocate to other European jurisdictions with similar tax benefits, potentially reducing France’s competitive edge in the global shipping industry.
“It is reasonable to believe that shipowners currently under French tonnage tax regime would consider changing flag to another European flag avoiding French corporate taxation, whilst still retaining the benefit of their French tax leases. Other jurisdictions, sometimes referred to as ‘flags of convenience’, have even lower to non-existent taxation of earnings.
“While the tax advantages of abolishing the French tonnage tax may seem attractive, the economic implications are far-reaching, and the strategic disadvantages of abolishing the tonnage tax call for restraint. The regime not only supports the maritime industry, it also aligns with France’s strategic interests as a leading maritime nation.”
Please also see the article outlining the proposals to abolish the French Tonnage Tax here.
