Extension of operating State Aid for Norwegian maritime fleet approved

Brussels, 14th September 2017:  The EFTA Surveillance Authority (“ESA”) has approved the extension of Norway’s seafarer tax refund scheme under Article 61(1) of the EEA Agreement, which mirrors the general prohibition of #StateAid contained in Article 107(1) TFEU.

In April 2016, the ESA approved a Norwegian scheme granting tax and social security contributions refunds of 26% for seafarers on ships registered in Norway on either the Norwegian Ordinary Register (“NOR”) or the Norwegian International Ship Register (“NIS”).

The amendment approved by the EAS earlier this month extended the scope of the scheme to extend the refund scheme to shipping companies for employing seafarers on vessels registered in the NIS above 10,000 gross tonnes engaged in the transport of oil, chemicals, gas and roll-on-roll-off cargo on a long-distance or inter-continental maritime transport basis.

In its decision letter, the ESA acknowledges that the aid scheme is an operating aid scheme.  Although such and therefore, in principle, the most distortive kind of State Aid, the ESA justifies both its original 2016 decision and this month’s extension of scope by reference to the ESA’s own Guidelines on Aid to the Maritime Transport sector.

Specifically, the ESA stresses that the EEA maritime transport sector faces fierce international competition from vessels registered in third countries, particularly those which apply open register policies – more commonly known as “flags of convenience” – which continue to enjoy a significant competitive edge over the registers of EEA States.

 

Image result for international shipping registers

The tiny West African state of Liberia is second only to Panama in terms of gross tonnage registered (Source & image credit: https://goo.gl/Q7RoxV) 

Under the scheme, shipping companies are granted full refunds of taxes and social security contributions paid for EEA seafarers on ships registered in Norway. This way, the Norwegian maritime authorities aim to encourage shipping companies to recruit seafarers from Norway or other EEA States.

The general NIS category currently covers 81 vessels and 520 seafarers, with the Norwegian authorities estimating that 90 % of NIS registered vessels could be covered by the approved amendment. The amendment entails an annual increase of the refunds of NOK 80 million (approx. EUR 8.5 million) until 2026.

ESA press release: http://www.eftasurv.int/press–publications/press-releases/state-aid/state-aid-esa-approves-expansion-of-norway-s-seafarer-tax-refund-scheme

ESA decision letter: http://www.eftasurv.int/da/DocumentDirectAction/outputDocument?docId=3900

EFTA Surveillance Authority: http://www.eftasurv.int