Commission Decision (EU) 2019/1116 of 19 December 2017 on State aid SA.33829 (2012/C) Maltese tonnage tax scheme and other State measures in favour of shipping companies and their shareholders (notified under document C(2017) 8734) (Text with EEA relevance.)

The aid granted under the tonnage tax scheme constitutes new aid within the meaning of the Accession Treaty since 1 May 2004.

The aid granted under the tonnage tax scheme is compatible with the internal market, subject to compliance with the commitments set out in the Annex.

1 The following elements of the tonnage tax scheme are incompatible with the internal market: (a) The eligibility for tonnage taxation of income generated from the operation of non-propelled barges, oil rigs and fishing vessels; (b) The eligibility for tonnage taxation of income generated from towage and dredging vessels and from bareboat chartering out without restriction; (c) The eligibility for tonnage taxation of vessels under time/voyage chartering without restriction; (d) The eligibility for tonnage taxation of revenues from ancillary activities without the restriction that the majority of the tonnage taxed revenues of the tax beneficiary stem from core shipping activities and the lack of mechanisms in place to ensure that land-based services are provided at arm's length; (e) The eligibility for tonnage taxation for companies engaged in shipping without the requirement that tonnage taxed shipping organisations having also non-EEA-flagged vessels in their fleet increase or maintain the share of EEA-flagged tonnage of the fleet if this share is below 60 %; (f) the eligibility for tonnage taxation of activities ‘as otherwise may be prescribed’; (g) The exemption from taxation of capital gains from the sale or transfer of ships applied to Maltese residents.

2 The following measures are also incompatible with the internal market: (a) The exemption from taxation of capital gains from the sale of shares in shipping companies applied to Maltese residents; (b) The exemption from income tax on the interest income or other income of financial institutions in relation to the financing of shipping companies or tonnage tax ships; (c) The exemption from the duty on documents and transfers for the transfer of shares in shipping organisations for Maltese residents; (d) The exemption from payment of fees at ministerial discretion. Malta shall remove those tax exemptions from its legislation and adapt the scope of the tonnage tax scheme as specified in the commitments set out in the Annex.

Individual aid has not been granted in relation to the measure set out in Article 3, first paragraph, as well as in relation to the measures set out in Article 3, second paragraph, indents (b) and (d). No recovery is required in relation to these measures.

Individual aid granted under the measures referred to in Article 3, second paragraph, indents (a) and (c) is incompatible and must be recovered, save where it fulfils the conditions laid down by Article 3 of Regulation (EU) No 1407/2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid.

1 Malta shall recover incompatible aid granted under the measures referred to in Article 5 from any beneficiaries.

2 The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery.

3 The interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004 and to Commission Regulation (EC) No 271/2008 amending Regulation (EC) No 794/2004.

1 Recovery of any incompatible aid granted under the measures referred to in Article 5 shall be immediate and effective.

2 Malta shall ensure that this Decision is implemented within four months following the date of notification of this Decision.

Malta shall inform the Commission, within two months of the notification of this Decision, of the measures taken to comply with it and shall submit the following information: (a) the total amount of incompatible aid received by any beneficiaries identified; (b) the total amount (principal and recovery interests) to be recovered from each beneficiary; (c) a detailed description of the measures already taken and planned to comply with this Decision; (d) documents demonstrating any beneficiaries have been ordered to repay incompatible aid.

This Decision is addressed to the Republic of Malta.