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European forwarders and terminal operators urge EU to deal with “market distortions”

European forwarders and terminal operators urge EU to deal with “market distortions”
The associations have written to Commissioner Margrethe Vestager

CLECAT and FEPORT, which represent thousands of European freight forwarders and port terminals have called on the European Commission to avoid market distortions and to unbundle activities eligible for favourable tax treatment under tonnage tax schemes.

The call follows last week’s decision by the European Commission, clearing the Italian maritime industry state aid.

The special tax regime will not only be applied to a shipping company’s core revenues from shipping activities, such as cargo and passenger transport, but equally to certain ancillary revenues that are closely connected to shipping activities.

In recent letters to Margrethe Vestager, European Commissioner for Competition, the associations invited her to clarify the state aid rules in order to avoid risks of distortion of competition and to ensure a level playing field.

The associations believe the Commission should ensure that ancillary services, which are also offered by other parties in the maritime logistics supply chain, are excluded from the scope of eligibility for tonnage tax and that the decisions including those provisions are amended accordingly.

Lamia Kerdjoudj-Belkaid, secretary general of FEPORT, said: “The privilege granted to the shipping companies, allowing them to benefit from preferential tax treatment for their cargo handling activities, distorts competition between integrated terminals and independent ones.

She continued: “We believe that it is the role of the Commission to clarify the rules to avoid risks of distortion of competition and to ensure a level playing field. This is particularly important when exceptions to the general rules on State Aid are benefiting one sector as it is the case for maritime transport.”

Nicolette van der Jagt, director general of CLECAT, added: “There are now clear cases that more vertically integrated carriers can benefit from tax schemes, which provide incentives for carrier haulage (door-to-door transport arranged by the carrier) rather than merchant haulage (where door-to-door transport is arranged by the shipper or freight forwarder), which obviously is not acceptable to us.”

The associations have “serious doubts” about the Commission’s methodology to assess the risk of spill-over from favourable tax treatment of shipping companies into other sectors unrelated to maritime transport.

Hence, they are calling on the Commission to follow the recommendations proposed by the ITF OECD report on “Maritime Subsidies” to amend the EU Maritime State Aid Guidelines and to unbundle the activities eligible for favourable tax treatment under tonnage tax schemes.