Flying the Dutch flag – Joint webinar on the pro’s and cons of the Dutch flag

It was great to see so many enthusiasts during the Flying the Dutch flag webinar. It shows that the topic is current and that industry experts are interested to learn more. With dial-ins from more than 10 countries, shipping professionals from ‘all over the world’ could hear first-hand from the managing director of the Royal Association of Netherlands Shipowners (KVNR) on the pros and cons of the Dutch ship register.

The webinar started with an overview of the various international registers and the relative position of the Dutch register by Raymond Ko of Marstrat. Though the Dutch register might be small in numbers, it is perceived as a high quality register. NL holds the 31st place of flag states based on size (dwt) and holds the 4th place on the Paris MoU White List (1st place of EU countries).

There is a direct link between a strong fleet, the Dutch maritime cluster, and the economy. Therefore the Dutch Ministry of Infrastructure & Water Management (I&W) launched a campaign to promote the NL flag in 2019. The campaign should lead to an increased number of Dutch flagged ships. Consequently resulting in higher employment and a stronger position of The Netherlands in the International Maritime Organization. Next steps of the campaign include promotion of the Dutch register at international tradeshows and conferences, when Covid-19 allows.

Annet Koster, managing director of KVNR, explained why she is content with the efforts of the Ministry to increase the Dutch flag registrations. With more than 1,000 seagoing vessels flying the Dutch flag, and another 1,000 under foreign flag but managed from The Netherlands, there is still a world to win.

The basic needs for shipowners when choosing a register are 1) the ease of the registration process, 2) coordination between policy-making and execution of registry tasks, 3) an attractive tax regime, 4) labor law and social affairs, 5) ship finance and 6) the new Act on the nationality of seagoing vessels for the Kingdom of The Netherlands.

It was interesting to hear the explanation of Annet, not only the pros like the low registration fees, an attractive fiscal regime and the top quality maritime services community, but also the cons were addressed. These include that private armed guards not yet allowed, but expected in the course of 2021, and the ongoing discussions with the unions on minimum wage. Another item is that “bareboat out” is not yet codified, which makes it difficult, but which should become possible under the new Act on nationality of seagoing vessels.

As the proof of the pudding is in the eating, students of the Maritime & Logistics university o.a.s. were asked to make a comparison for a Dutch shortsea shipping company. They provided the attendees with a comparison of Dutch and Singapore Flag registrations for De Bock Maritiem, a boutique shortsea shipping firm. Cynthia Everduin is working at De Bock Maritiem as SSHEQ manager and simultaneously studying for her Master of Science diploma together with Alex Wijnveldt and Richard Kraaijeveld. The comparison was done via the Hågen Hansen method (Norwegian law firm) and showed that the Dutch flag state is doing a better job inspecting their own ships, and also has proper legislation in place. This gives the Dutch shipping companies an extra incentive to comply with all these rules and regulations.

With these, the conclusion was that for companies trading within the EU, the Dutch flag is the better option of these two. It might be interesting to make a next comparison between EU flags.

One of the main attractive elements of flying the Dutch flag, is the tonnage tax regime. The Netherlands was the first EU Member State with tonnage based taxation, where Greece and Cyrus have an actual tonnage tax. Connie Roozen, owner of C&B More explained in detail.

The Dutch fiscal climate offers various advantages that are beneficial for international shipowners and ship managers. E.g. The Netherlands have concluded international tax treaties with many jurisdictions for example. Because of these treaties double tax bills are prevented and that is interesting for companies that operate globally.

Shipping companies can apply for the Dutch tonnage tax regime, assuming certain conditions are met, and the taxable profit is calculated based on the net tonnage of the vessel(s). The potential significant impact of the scheme on a company’s net yield makes it a very interesting tax facility. In absolute numbers the Dutch scheme results in the lowest tax bills compared to arrangements in other countries. When you take the reliability and predictability into account, the Dutch tonnage tax regime is a good choice.

In addition to the Dutch tonnage tax, another favorable aspect of registering ships in The Netherlands is the wage tax facility for seafarers, Connie explained. Owners can deduct the wage taxes of 40% of the wage of EU seafarers and 10% for non EU seafarers.

Both Connie and Annet showed that there is room for improvement but that these are being made, with the joint efforts of the Ministry of Infrastructure and Water Management. Not only a European level playing field, but even a global level playing field is extremely important, so all parties are working on that.

With a great number of people attending the webinar, with multiple questions being asked and diverted via moderator Martin Bloem (Topsector Water & Maritiem) it proves that this topic is very relevant for our maritime cluster.

RMSC and KVNR are willing to repeat the presentations for a specific audience upon request.