TTM03680 - Qualifying companies and ships: tugs other than qualifying tugs

Not all tugs qualify for Tonnage Tax. Ports and harbour tugs do not qualify. A sea going tug must spend at least 50% of its operational time in towage or salvage at sea in order to qualify for Tonnage Tax. A qualifying tug must also be registered on the register of a Member State (TTM03685)

Any waiting time spent by a tug for the purposes of a particular activity is treated as time during which the tug is used for that activity.

Examples of how this will apply to different types of tugs are:

• A tug or AHTS (see below) used to tow barges or other un-powered vessels across the sea may qualify for Tonnage Tax
• An ocean going salvage tug or AHTS may qualify for Tonnage Tax
• A tug or AHTS used to assist ships into and out of harbour does not qualify for Tonnage Tax
• A tug or AHTS towing barges on inland waters does not qualify for Tonnage Tax
• A tug or AHTS towing barges mainly in estuarine conditions (for example the Humber or Thames estuaries) will not qualify for Tonnage Tax.

This list is not exhaustive

Sunken cargo

Where a tug is involved in raising sunken cargo, this is regarded as diving support, and will be a qualifying ship under Sch 22 para 19(1)(d) -see TTM03570.

Any profits from the sale of salvaged goods will fall outside the Tonnage Tax ring-fence.

Anchor Handling Tug Supply vessels

Anchor handling tug supply (AHTS) vessels are a type of support vessel for the oil industry. They differ from platform supply vessels in that they are fitted with winches to provide towage services.

Whether AHTS vessels are treated as tugs is a question of fact. If an AHTS vessel is acting as a tug at sea for any period, the flagging rules for tugs will apply (TTM03685). Once the AHTS has been in use on any towage service, these rules will apply for all the activities on which the AHTS is subsequently engaged. This means that the AHTS will not, from then, be a qualifying vessel for TT unless it is flagged in a EU Member State. All of the income from all activities will not be relevant shipping income for tonnage tax.

An AHTS used to tow an Oil Rig at sea may qualify for TT. But an AHTS used to tow Oil Rigs within the confines of a harbour, such as the Cromarty Firth, does not qualify for Tonnage Tax”

References

FA00/SCH22/PARA20(A)(2) Qualifying tugs and dredgers