Luxembourg, a traditionally non-Marine nation, has developed a competitive legal framework for shipping companies. Among other minor advantages, the merchant shipping status of Luxembourg offers VAT exemption (EU-wide), an unlimited right of anchorage in EU waters, tax-free storage of fuel, EU flagging, advantages of the financial centre of Luxembourg for ship financing and the following competitive tax regime:
– The existence of a favourable rate of taxation on profits;
– The existence of favourable depreciation arrangements, i.e. the normal working life of ships should not be greater than ten or twelve years, and;
– Sliding-scale depreciation must be allowed;
– A favourable regime that permits carrying forward losses;
– Profits from the sale of a ship that are reinvested in the purchase of another ship or in the modernization of another ship benefit from exemption of tax;
– Finally, the Luxembourg shipping company is taxed under the general provisions of the Luxembourg Income Tax Law, and does not benefit from an exempt status. This is of supreme importance in the context of the application of double tax treaties particularly with regard to repatriation of dividends and profits.
– Tax credit on investment.
Which vessels may be registered in Luxembourg?
The Luxembourg law allows the registration of all vessels of at least twenty-five tonnes which are, or are intended, to be used on a regular basis for the sea transport of persons or things, for fishing, towing or any other gainful form of shipping activity. The law lays down an age limit of fifteen (15) years for an initial registration.
By derogation from the tonnage limit laid down in the law, passenger ships may be entered in the Luxembourg public shipping register provided that they satisfy the provisions of the 1974 International Convention on the Safety of Life at Sea, as subsequently amended. Yachts should be over 24 meters (loadline) for registation in the maritime register.
Eligibility to register a ship in Luxembourg
Those ships that are more than 50% owned by residents of the European Union or by commercial companies that have their registered office in a member state of the Union, and those chartered by such persons or companies, provided that in all such cases all or part of the management of the ship in question is carried out from Luxembourg territory.
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Our team of professional yacht agents will happily guide you to decide on the best suited flagging options for your yacht, based on the intended use of the vessel (private use, charter, VAT reclaim, export, …) as well other parameters such as taxes, insurance, mortgages and loans, boat & yacht finance and refinancing, all to fit with your personal circumstances.
While we are happy to register your vessel in the country of your choice, including through purpose-built holding companies and tax efficient ownership legal structures if necessary, we do have Memorandum of Understanding (MoU) to enable fast track registration with the following commercial ships and pleasure yachts registries: