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Tuesday, 26 March 2013

Tonnage Tax - Bank Sub-Accounts in seafarer's names


Tonnage Tax - Bank Sub-Accounts in seafarer's names

One aspect of Tonnage tax was  that seafarers had to be employed with contracts issued by a German company.  Certain deductions for tax and social security contributions had to be made from salary, but for certain (mainly Non EU) crewmembers these contributions/deductions could be reclaimed at a later date.

Payments for refunds though would be by bank transfer in the name of the individual. So normally the crewmember's home bank account details should have sufficed.  But, employing crew under a German contract was expensive enough as it was, if the crewmember had already finished his contract (and perhaps wasn't even aware that he might be due any refunds) what was to stop the company receiving these refunds themselves, and perhaps subsidising the cost of the exercise?

Certain banks would allow sub-accounts of the crewing company's main bank account to be set up in the name of the crewmembers to receive any refunds of tax or social security contributions.

It was, and could well still be, a widely practiced procedure.

Here's an illustration from correspondance between offices of  a leading crew management company and referring back to a senior management figure of Thien & Heyenga, who was already well versed in the procedure it would seem.







Set up the sub accounts with a Cyprus bank (Why a Cyprus bank ??? - because they would do it (not many respectable banks would want to be part of what is clearly a questionable practice); because not too many questions would be asked and their due diligence was virtually non-existant at the time).  Provide these sub-account details to the authorities for receiving the payment of any reimbursements.  Receive the funds.  And forward them to the crewmember ??   Really  ??  You think so ??

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