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30 December 2019 - 11:27am

On 16 December 2019, the European Commission approved the support scheme to Estonian maritime transport.

Since 2012, the Estonian Maritime Administration (EMA) has been working hard together with its partners to raise the competitiveness of the Estonian flag and convince shipping companies to register their cargo ships in the Estonian shipping registers. The approval of the state aid scheme by the Commission is necessary for entry into force of the package of amendments to the current legislation (The Act Amending the Act Amending the Law of Ship Flag and Ship Registers Act and Income Tax Act and Other Related Acts).

Approval of the granting of the state aid package to support maritime transport was needed to comply with the rules of competition in the EU. In general, state support to one particular economic sector or particular enterprises is forbidden in EU legislation, but if it is necessary for economic growth in the country, it can be allowed in certain cases. Granting of state aid will enable to raise the competitiveness of the Estonian maritime sector and create conditions similar to those in other EU countries that already provide state aid.

In order to be granted authorisation for state aid by the Commission, the Estonian Maritime Administration, the Ministry of Economic Affairs and Communications, the Ministry of Finance and the Ministry of Social Affairs prepared a pre-notification, and then the notification submitted to the European Commission on 16 August 2019. Negotiations followed, the positive result of which we now have in the approval of the state aid scheme.

The amendments package, i.e. the Act Amending the Act Amending the Law of Ship Flag and Ship Registers Act and Income Tax Act and Other Related Acts will entail amendments to 10 different laws. These amendments are aimed at simplifying the process of registration of ships in the register of bareboat chartered ships and establishing a special tax regime for vessels eligible for the new tonnage scheme. The special regime will be applied to cargo ships of gross tonnage at least 500 engaged in international maritime transport, and partly also to passenger ships of gross tonnage at least 500 operating outside the EEA.

The amendments will also better the situation of seafarers. All Estonian seafarers will have access to the state health insurance scheme, including seafarers employed under foreign flags, who so far have had no access to state health insurance. In order to raise the competitiveness of Estonian shipping, the income tax rate 0 % will be applied to seafarers working on ships eligible for the special tax regime. In the future, when the number of ships flying the Estonian flag increases, Estonian seafarers will be able to work on vessels flying the Estonian flag, which in turn will make the Estonian social insurance schemes accessible to them.

The draft legislation is planned to enter into force on 01 July 2020.

See also the Commission’s press release.