TTM03170 - Qualifying Companies and ships: ship chartered-out because of short-term over-capacity

A bareboat charter-out is allowed in the regime if

• the company has short-term surplus capacity (for instance through a temporary downturn in the market)
• and
• the ship is bareboat chartered-out for a period of no more than three years.

If the ship is bareboat chartered out for a period that exceeds three years, including multiple charters where the total period exceeds 3 years, this leg of the test will not be satisfied.

Both legs of this test must be met. The company must have a legitimate reason for considering that the surplus capacity is short-term. Where there are multiple charters, or an evergreen charter, and the total term or period the ship is chartered out exceeds three years, the whole of the term or charter will be outside tonnage tax. The company will not be regarded as operating the vessel from the beginning of the first bareboat charter out. An evergreen charter is one that continues in perpetuity until it is cancelled by either party. If the bareboat charter term does exceed three years it will be necessary to assess the profit from the ship on normal computational principles for the first three years of the charter.

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