This is contribution number five by KPMG Meijburg & Co regarding Dutch tax relief available to entrepeneurs engaged in operating sea-going vessels.
This article is most likely to be relevant for investments by Dutch companies engaged in the operation of sea-going vessels (ie shipping activities).
On July 14, 1994, the Dutch Parliament adopted a Bill regarding the promotion of ocean shipping activities ("the Bill"). The Bill entered into force retroactively as of January 1, 1994. Furthermore, the Bill should still be checked by the Commission of the European Union. The Bill provides for the granting of facilities to ocean shipping companies.
The effect of the facility can be twofold: eligible entrepreneurs can choose between a tax measure (the "ocean shipping relief") and a subsidy. The ocean shipping relief provides for a tax-deductible expense. The size of the deduction depends on, among other things, the size of the qualifying investments in sea-going vessels. The maximum relief is 25% of the amount invested in a sea-going vessel. However, the relief cannot exceed Dfl. 20,000,000 per ship. It should be borne in mind that the ocean shipping relief does not influence the fiscal depreciation basis of the ships.
Instead of the tax deduction one may also opt for a subsidy. The subsidy, too, depends on the size of the qualifying investments in sea-going vessels. The maximum subsidy is 10% of the amount invested in a sea-going vessel. However, similar to the ocean shipping relief, the subsidy cannot exceed Dfl. 8,000,000 per ship. Unlike the deduction, the subsidy will influence the fiscal depreciation basis of the ships. The subsidy is paid in two instalments: an instalment of 80% of the total amount, followed one year later by the remaining 20%.
In order to obtain the deduction or the premium, a large number of conditions should be met.
One of these conditions is that an application should be filed. This application should indicate whether one chooses the tax deduction or the subsidy.
To what period does the regulation apply?
In principle the Act on the Promotion of Ocean Shipping only applies to the year 1994. There is a possibility, however, that the regulation will be prolonged in 1995. In addition, it is possible that in 1995 the ocean shipping relief will be substituted by a free depreciation for sea-going vessels. On this point, however, there is no agreement yet between Government and Parliament.
The facility applies to so-called ocean shipping entrepreneurs, i.e.:
-legal entities;
-individuals;
-partnership firms;
-limited partnerships;
-ship-owning companies;
-European Economic Interest Groupings,
who are or will be (starting enterprises) entirely or partly engaged in operating sea-going vessels. A sea-going vessel is generally defined as a ship (separately defined) which sails under the Dutch flag and possesses an ocean shipping certificate.
Conditions which should be met include:
1.The enterprise should perform ocean shipping activities in the Netherlands from a place of business in the Netherlands or from a Dutch branch.
2.The day-to-day management of the Dutch establishment or the Dutch branch should be vested with one or more individuals who have the nationality of one of the Member States of the European Union.
3.The ocean shipping enterprise should submit a so-called structure plan ("structuurplan") to the Ministry of Transport and Communications.
4.The enterprise should meet reasonable requirements in respect of profitability, solvency and liquidity.
5.Another condition is that the obligations included in the structure plan should make a substantial contribution to the structural improvement of the Dutch ocean shipping industry.
6.If the sea-going vessel is alienated within a certain period, the ocean shipping relief will partially or entirely be recaptured.
April 1994, KPMG Meijburg & Co
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Further information can be obtained from Mr Alfred GM Groenen, MCL, KPMG Meijburg & Co, Amsterdam (Netherlands); fax 31 (20) 656 1247
© Mondaq Ltd 1995 Tel +44 171 820 7733.
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