Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

111Q International shipping income exclusion

Summary

The international shipping industry has long been subject to industry-specific tax rules. On this basis there is an international shipping income exclusion contained within the GloBE Rules.

Details

Definitions

(1) Introduces definitions required for the purposes of the exclusion of international shipping income from the scope of this Part.

“bareboat charter terms” has the same meaning as it has in section 697A, i.e. in relation to the charter of a ship, means the letting on charter of a ship for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint the master and crew;

“international shipping activities” means:

  1. transportation of passengers or cargo by ship in international traffic, whether the ship is owned, leased or otherwise at the disposal of the constituent entity,
  2. transportation of passengers or cargo by ship in international traffic under slot-chartering arrangements,
  3. leasing of a ship to be used for the transportation of passengers or cargo in international traffic on charter fully equipped, crewed and supplied,
  4. leasing of a ship used for the transportation of passengers of cargo in international traffic, on bareboat charter terms, to another constituent entity,
  5. participation in a pool, a joint business or an international operating agency for the transportation of passengers or cargo by ship in international traffic, and
  6. sale of a ship used for the transportation of passengers or cargo in international traffic provided that the ship has been held for use by the constituent entity for a minimum of one year;

“international shipping income” means the net income obtained by a constituent entity from international shipping activities, where the transportation is not carried out via inland waterways within the same jurisdiction;

“qualified ancillary international shipping activities” means

  1. leasing of a ship, on a bareboat charter basis, to another shipping enterprise that is not a constituent entity, provided that the duration of the charter does not exceed three years,
  2. sale of tickets issued by other shipping enterprises for the domestic leg of an international voyage,
  3. leasing and short-term storage of containers,
  4. detention charges for the late return of containers, and
  5. provision of services to other shipping enterprises by engineers, maintenance staff, cargo handlers, catering staff, and customer services personnel;

“qualified ancillary international shipping income” means:

  1. the net income obtained by a constituent entity from qualified ancillary international shipping activities, provided that such activities are performed primarily in connection with the transportation of passengers or cargo by ships in international traffic, and
  2. investment income, where the investment that generates the income is made as an integral part of carrying on the business of operating ships in international traffic.

International shipping income or qualified ancillary international shipping income

(2) Where the strategic or commercial management of all ships concerned is effectively carried on from within the jurisdiction where the constituent entity is located then the international shipping income and the qualified ancillary international shipping income of that constituent entity shall be excluded from the calculation of its qualifying income or loss.

(3) Where the calculation of a constituent entity’s international shipping income or qualified ancillary international shipping income results in a loss, such loss shall be excluded from the calculation of the constituent entity’s qualifying income or loss.

(4) The aggregated total qualified ancillary international shipping income of all constituent entities located in a jurisdiction shall not exceed 50 per cent of those constituent entities international shipping income.

Treatment of costs associated with international shipping activities and qualified ancillary international shipping activities

(5)(a) Costs incurred by a constituent entity that are directly attributable to its international shipping activities and qualified ancillary international shipping activities shall be allocated to such activities for the purpose of calculating the international shipping income and the qualified ancillary international shipping income of the constituent entity.

(5)(b) Costs incurred by a constituent entity that indirectly result from its international shipping activities and qualified ancillary international shipping activities shall be deducted from the constituent entity’s revenues from such activities to calculate the international shipping income and qualified ancillary international shipping income of the constituent entity on the basis of its revenues from such activities in proportion to its total revenues.

(6) All direct and indirect costs attributed to a constituent entity’s international shipping income and qualified ancillary international shipping income in accordance with subsection (5) shall be excluded from the calculation of its qualifying income or loss.

Relevant Date: Finance Act 2024