Shipping Challenge to EU Implementation of Pillar Two


Pillar 2 of the OECD BEPS project presents a number of problems for the shipping industry. Although there is a carve-out for shipping, its scope is inconsistent with the scope of many, if not all, tonnage tax regimes and it creates a sub-category of shipping income that is subject to limitation for exemption. As published in the May 8 Official Journal, Case T-143/23 has been filed by “VF” against the Council of the European Union seeking to annul the Council Directive ensuring the minimum level of taxation, particularly as it related to shipping enterprises.

As justification for annulment, the plaintiff asserts that the Directive infringes:

·        the general principle of equal treatment of comparable enterprises;

·        the general principle of proportionality;

·        the principle of protection of legitimate expectations and legal certainty; and

·        Articles 115 and 107 TFEU.

The outcome of this case may impact more than shipping interests and impact implementation of Pillar 2 in the EU as well as internationally.