Thursday, 8th June 2023

Greek shipping industry faces threat of higher taxes

By Editor
26 October 2015   |   11:51 pm
On 6 April 1941, Piraeus, one of the main harbours in Greece, was hit in a German bombing raid.


On 6 April 1941, Piraeus, one of the main harbours in Greece, was hit in a German bombing raid. According to Laird Archer, an American aid worker, “nothing in all the sound effects of catastrophe in Hollywood films could match the crashing thunder”.
The port was totally destroyed. But after the war, as Greece looked to the shipping industry to rebuild its economy it was soon transformed by the country’s tycoons into a global shipping centre and commercial hub for the Mediterranean.

The Greek shipping fleet has since become the biggest in the world, with almost 4,000 ships representing 19% of global shipping capacity. It contributes more than 7% towards the struggling economy, but the country’s creditors say it can do more.
According to the BBC, the industry currently pays no tax on international earnings brought into the country under rules incorporated into Greece’s constitution in 1967.

But since July, when the government proposed to increase shipping taxes and to end other privileges due to pressure from the European Union (EU) and other international creditors, ship owners have been threatening to move their businesses abroad.
Shipping has been in Stavros Tsolakis’ family for four generations. His great grandfather began the business by trading wood and olives from Mount Athos to Thessaloniki.
He himself is a professor of maritime economics, specializing in the management of ocean-going ships, and says the EU has no right to make such demands.

“Juncker (President of the European Commission, Jean-Claude Juncker) is a hypocrite because Luxembourg offers international ship owners the same tax benefits that the Greek government offers to Greek ship owners – in order to convince them to move to Luxembourg, a landlocked country far away from sea.
“The laws here are in line with international tax laws that exist in most maritime centres in all parts of the world. German and Dutch ship owners enjoy even stronger tax benefits than their Greek counterparts,” he says.

Other ship owners suggest that they are being encouraged by the EU to leave the country, purely so that the German shipping industry can become more competitive.

Though the majority of the world’s shipping is registered “offshore”, in places like Panama and Liberia, Greece is unique for being a small country with a large, locally owned shipping fleet under its own flag.
It also has a prominent – and highly politicised – shipping elite, and observers say that the EU has long wanted Greece to subject this shipping elite to a normal business tax system.

Prof Tsolakis believes that if the reforms are implemented there will be a huge exodus. And it is not only the industry that will lose out.

“We mustn’t forget the philanthropists of this industry. Ship owners fund a lot, contributing to the arts, culture, education, health and social welfare. The majority of state ambulances are likely funded by that money,” he says.
“It is not only ship owners that benefit from shipping in Greece, but a plethora of occupations like shipbrokers, insurance brokers, bankers, ship suppliers, seafarers, ship repairers, ship agents and academics.”

However, shipping business consultant George Xiradakis, is not so convinced that Greek ship owners are ready to leave their country.
“It’s true. Every company has a plan B,” he explains. “But really I think it’s just to calm the shareholders. It makes sense to be prepared should taxes rise to such an extent.”