Calls to Change Swiss Law to Save Its National Merchant Marine

Helvetia with the goddesses of railroad and shipping above the main entrance of Hauptbahnhof Zürich (Tony Badwy photo - CC BY-SA 3.0)

Published Sep 22, 2023 7:36 PM by The Maritime Executive

A new initiative is emerging calling for the Swiss government to take steps to support the dwindling Swiss-flagged merchant fleet. The Swiss Shipowners Association in partnership with the international trade union Nautilus International is calling for changes to a pending tax law which they say would likely put an end to an already greatly diminished number of ships operating under the flag.

Switzerland, like many developed nations, has seen a steady decline in its national merchant marine. Shipowners have long sought countries with well-established and favorable regimes for shipping supported by their legal and tax policies. Panama and Liberia have long been leading flags and continue today to battle for the designation of the largest ship registry. Independent tracking services recently judged that Liberia had surpassed Panama based on total tonnage, with the Marshall Islands remaining in third place. EU member Malta has also adopted favorable positions, which helped it to be one of the few flags growing in Europe.

Developed nations struggle to hold on to the remains of the merchant fleet often with protectionist legislation or for example in the case of Norway created special segments to help shipping owners manage the high cost of operating under the national flag. According to today’s statement from Nautilus and the Swiss Shipowners Association, Switzerland's registry is down to just 14 ships and that is likely to continue to decline in the next two to five years as the remaining ships are grandfathered into a now-abolished guarantee system with their individual guarantees set to expire.

Despite being a landlocked country, Switzerland’s historic tax regimes have long attracted many leading shipping companies to maintain headquarters in the country. The Greek Eugenidis group has had its corporate offices in Switzerland since after World War II. Mediterranean Shipping Company started by the Aponte family in Naples, Italy in 1970 moved its headquarters to Switzerland in 1978 and today others such as Torstein Hagen’s Viking travel group are also headquartered in Switzerland.

In the joint statement, Nautilus and the Swiss Shipowners are calling on the Swiss government to revise its positions for shipping to take advantage of the opportunity to ensure ships remain registered under the Swiss flag and the registry again grows.

“As is well known, the government is currently planning a tonnage tax. However, since in the meantime, it is not imposing any obligation on shipping companies to operate under the Swiss flag if they take advantage of this, we reject the current draft,” the groups write in their joint statement. The Swiss Shipowners Association has been actively lobbying against the current proposed tax laws.

The groups accept and believe that a tonnage tax is vital to the survival of the Swiss merchant fleet, but they want more specific linkage to shipping in the final legislation.

Nautilus points out that Switzerland is also home to many large commodity traders such as Glencore or Trafigura, which also have large elements of shipping within their business. Nautilus says there is not sufficient demarcation in the drafts of the tonnage tax, highlighting that it is also in contact with other "experts and Non-Government Organizations (NGOs) on this issue."

They contend that the traders would be able to pay their taxes at the lower three percent rate of the tonnage tax versus currently at local rates of between 10 and 15 percent.

Nautilus and the Swiss Shipowners Association are calling for the government to define the linkage between the tonnage tax and operating under the Swiss flag. They want Switzerland to rewrite its maritime law to reflect a modern flag, which is attractive to new vessels.

Top photo by Tony Badwy - CC BY-SA 3.0