6/16 – Wage tax deduction in favour of employers
Shipping companies do not have to pay wage tax to the tax office for their seafarers on German-flagged merchant ships (increase from 40% deduction to 100%).
Since June 2016, shipowners have no longer been required to pay wage tax for seafarers working on merchant ships flying the German Flag. Accordingly, the wage tax deduction has been increased from 40% to 100%.
The basis for this change is the Act Amending the “Einkommensteuergesetzes zur Erhöhung des Lohnsteuereinbehalts in der Seeschifffahrt” of 24 February 2016 (Federal Law Gazette I, p. 310). The Act also eliminates the previous 183-day rule: Crew members are no longer required to be employed for a period of 183 days for their shipowner to benefit from the tax advantage.
With this law, the federal government and the federal states are fulfilling their promise to make the German Flag more competitive. Shipowners will continue to deduct the full amount of wage tax from their seafarers’ wages, as before, but will then be allowed to retain this wage tax in full. This puts German shipowners on an equal footing with foreign shipping companies, which are not required to pay wage tax on their seafarers’ wages.
