Action may be required
The European Commission apparently raised questions to the Dutch government on the Dutch flag limitations applicable to Commercial Cruising Vessels (CCV) under the wage tax facility for seafarers (afdrachtvermindering zeevaart). Under this scheme, shipping companies and other entities employing seafarers working on vessels flying the Dutch flag, are entitled to a reduction on the wage tax and national insurance contributions payable to the Dutch tax authorities. This tax relief amounts to 40% of the seafarer’s qualifying remuneration if the seafarer is a resident of the Netherlands or an EU/EEA country and 10% for other seafarers who are subject to Dutch national insurance and/or Dutch wage tax.
If the Dutch flag limitation for CCV’s is decided to be prohibited under EU law and/or the Community Guidelines on State aid to maritime transport, this will in our view also have impact on other sea-going vessels qualifying for the wage tax facility, like cargo vessels, dredges and tugs. Accordingly, this could mean that employers who are registered for wage withholding tax purposes in the Netherlands, may also be able to claim the facility for seafarers working on vessels with an EU/EEA flag and not only for seafarers working on Dutch flagged vessels.
In view hereof, we recommend to investigate:
- if and to what extent an extension of the scope of the wage tax facility could impact your company; and
- what the potential benefit could be.
Depending on the outcome, you may consider filing a letter of objection against the wage tax/national insurance contribution payments (to be) made to the Dutch tax authorities. Such letter must ultimately be filed within 6 weeks after the payment date.