Tonnage Tax is a way for qualifying shipping companies to calculate their shipping related profits for Corporation Tax (CT) purposes. The shipping related profits are calculated based on the tonnage of the ships used in the company’s shipping trade.
What is a qualifying shipping company?
A qualifying shipping company must:
- pay CT
- operate qualifying ships
- carry on the strategic and commercial management of the qualifying ships in Ireland.
What is a qualifying ship?
A qualifying ship is a vessel that is large enough to use for commercial operation. The ship will have to be certified as seaworthy under the International Load Line Convention or the Safety of Life at Sea (SOLAS) Convention. The following vessels are not qualifying ships:
- fishing and fish factory vessels
- ships mostly used for sport and recreation (apart from ships used for commercial purposes with an overnight passenger capacity of 50 or more, excluding crew)
- harbour, estuary and river ferries
- offshore installations which are not used for transporting passengers or cargo by sea
- an oil tanker used for delivering oil from an offshore oil field to an on shore storage facility
- dredgers, working platforms such as seagoing cranes and cable laying vessels
- non-ocean going tugs.
A company must complete a Tonnage Tax 1 form before it can enter into this scheme. The company must include on the form:
- whether a single company or a group of companies are using the scheme
- the name and address of the representative company
- the name of the company secretary, if a group of companies are choosing the scheme
- which accounting period the Tonnage Tax applies to.
The Tonnage Tax 1 form should be sent to the Business Income Tax Branch.
Shipping related profits calculated using the Tonnage Tax method are taxed at the 12.5% rate of CT. The company must use the Revenue Online Service (ROS) to include details of the Tonnage Tax profits on their annual CT Return Form CT1.
See the Tonnage Tax Manual for more information.