Tonnage Tax

A new attractive new tax incentive in Switzerland

The Swiss Federal Council has recently put out for consultation the federal law on tonnage tax for seagoing ships.

The introduction of this tax is intended to make Switzerland competitive - including with the European Union – for shipping companies active in the transport of goods and passengers by offering them a comparatively low tax burden.

Under this regime the profit is determined on a flat-rate basis by taking into account the net tonnage of the vessel multiplied by a graduated scale and the number of operating days, and then taxed at the ordinary rate.

Thus, for a ship with a net tonnage of 19,990 tons and 320 days of operation, the net taxable profit is CHF 43’152.

As an example and on the basis of the current legislation and rates, the profit tax due would be :

  • CHF 5,951 in the canton of Vaud
  • CHF 6,037 in the canton of Geneva

An ecological incentive of up to 20% is also provided if the ship’s propulsion system meets the required conditions. This would reduce the above-mentioned profit tax to some CHF 4,761 in the canton of Vaud for instance.

The cantons may provide for a tax reduction for the equity capital of such vessels.

The other main features of the bill can be summarised as follows :

  • This regime applies to the various legal forms holding ships (individuals, partnerships or body corporates)
  • Ancillary activities carried out on board the vessel may also benefit from this favourable regime if they do not exceed 50% of the profits resulting from the operation of the vessel
  • At least 60% of the fleet’s tonnage must be registered in the Swiss ship register or in that of a Member State of the European Economic Area
  • Tonnage tax liability can be claimed for each vessel separately

There is no doubt that this particularly attractive tax regime, combined with the quality of life and legal certainty that prevail in the Country, as well as the network of double taxation agreements concluded by Switzerland, will interest many shipowners in domiciling or reorienting their activities in Switzerland.

In our view, it is wise to prepare sufficiently in advance, for example by means of simulations of the tax burden with and without the application of the tonnage tax at national and international levels.

Our specialists do remain at disposal for any advice or assistance. For additional information, do not hesitate to contact us:

  • Jean-Michel Clerc - T 021 552 63 63 - email: jean-michel.clerc[at]mercuris.legal
  • Denis Chahidi - T 021 552 63 63 - email: denis.chahidi[at]mercuris.legal