Impact to shipping industry if French Tonnage Tax is scrapped

Romain Farnoux, lawyer in Reed Smith’s Transportation Trade Group, commenting on the proposals to abolish the French Tonnage Tax, stated: “The potential abolition of the French tonnage tax regime, a beneficial tax framework for delivery corporations, is inflicting important concern inside the trade as early legislative elections reignited a debate began with the Finance Invoice for 2024. The French tonnage tax regime additionally helps 1000’s of jobs and encourages shipowners to register underneath the French flag, bolstering nationwide maritime affect and financial exercise.”

“The French Courtroom of Auditors estimates a possible 9.4 billion euro loss in tax revenues for 2022-2023 because of the tonnage tax regime, sparking debate on whether or not abolishing it might certainly increase public revenues.

“Many consider that eliminating the tonnage tax might drive shipowners to relocate to different European jurisdictions with related tax advantages, doubtlessly lowering France’s aggressive edge within the world delivery trade.

“It’s affordable to consider that shipowners at present underneath French tonnage tax regime would think about altering flag to a different European flag avoiding French company taxation, while nonetheless retaining the good thing about their French tax leases. Different jurisdictions, typically known as ‘flags of comfort’, have even decrease to non-existent taxation of earnings.

“Whereas the tax benefits of abolishing the French tonnage tax could seem enticing, the financial implications are far-reaching, and the strategic disadvantages of abolishing the tonnage tax name for restraint. The regime not solely helps the maritime trade, it additionally aligns with France’s strategic pursuits as a number one maritime nation.”

Please additionally see the article outlining the proposals to abolish the French Tonnage Tax right here.