On 24 May 2017, the Norwegian Government notified several amendments to the Norwegian tonnage tax regime. The amendments will now most likely be postponed due to discussions between the Government and EFTA's Surveillance Authority (ESA). The amendments are expected to come into force from 1 January 2018.
In 2008, the current Norwegian tonnage tax regime was approved by ESA until 1 July 2017. On 24 May 2017, the Government notified ESA about a new period with a continuation of the tonnage tax regime from 1 July 2017 until 31 December 2026. To ensure that the Norwegian tonnage tax regime is compliant with EEA law, the Government proposed in the notification to ESA certain amendments to the Norwegian tonnage tax regime.
The amendments were proposed to have effect from 1 July 2017, and included, inter alia, limitations on the chartering out of vessels on bareboat terms, limitations on chartering in on time- and voyage charter terms, and a proposal to include windmill vessels in the regime. Please find link to our previous newsletter regarding the proposed amendments under "Related articles" on the right hand side.
After discussions with ESA, the Government has realized that the continuation of the tonnage tax regime will not be approved by ESA before 1 July. The discussions with ESA are mainly on flagging requirements and the limitations on the chartering out of vessels on bareboat terms. The details of the discussions are not public, but it can be assumed that ESA desires further limitations in the possibility to charter out vessels on bareboat terms than originally proposed by the Government in the notification to ESA.
As the Government most likely will not receive an approval from ESA before 1 July for a continuation of the existing tonnage tax regime, the Government will apply to ESA for a prolongation of the existing tonnage tax regime for the entire 2017. If the application is approved, amendments to the tonnage tax regime will not come into effect before the income year 2018.