Taxes Consolidation Act 1997 section 697C

Calculation of profits of tonnage tax company

Section 697C sets out the rules for calculating tonnage tax profits, which replace a qualifying company's relevant shipping profits for corporation tax purposes.

• Tonnage tax profits are charged to corporation tax in place of a company's relevant shipping profits, and any losses arising from tonnage tax activities are disregarded for corporation tax purposes.
• Profits are calculated by reference to the net tonnage of each qualifying ship (rounded down to the nearest 100 tons), using a sliding scale of daily profit rates ranging from €1.00 per 100 tons for the first 1,000 tons down to €0.25 per 100 tons above 25,000 tons.
• The daily profit for each ship is multiplied by the number of days in the accounting period (or part period) during which the ship was operated as a qualifying ship, and the results for all qualifying ships are aggregated to give total tonnage tax profits.
• Where two or more companies jointly operate a qualifying ship, tonnage tax profits are divided in proportion to each company's share of the joint interest; if shares cannot be determined, each company is treated as if it were the sole operator.