Skip to main content

Jobs worry over proposal to scrap Danish net salary scheme

27 February 2024

Unions are warning that if the income tax arrangements under the Danish international shipping register, DIS, are abolished as a cost-cutting measure, it will lead to a loss of jobs as owners reflag abroad.

The Danish fleet is the 12th biggest in the world with 22.5m GT and 748 vessels in 2024, according to S&P Maritime.

The Danish Maritime Officers union (Lederne Søfart) said it is probably a bad idea to abolish the net salary scheme for seafarers working under DIS, though said it needed modernising.

Union leader Helle Andsbjerg said: ‘Danish shipowners have a responsibility towards society, for example by working for a green transition in transport, for ensuring reasonable wages and working conditions, and a healthy physical and psychological working environment on the ships. They should also contribute to attracting new, young Danish seafarers. And this is done by ensuring standards in Danish seafarer education.’

Ole Philipsen, leader of the officers' union Metal Maritime/CO-Søfart, said: ‘It would mean that the many new jobs that have started to come and which have enormous potential for Danish employment in offshore wind, will go to other countries along with other, existing jobs under DIS.’

Mr Philipsen said his members were surprised at the proposal to abolish the net salary scheme under DIS.

The proposal came in a report prepared by a government-appointed expert panel led by Christian Frigast. It suggested a number of measures the government could take to reduce government business and tax subsidies across several sectors.

The Denmark government spends some DKK 40 billion (GBP 4.6 billion) a year in subsidies, some of which only benefit certain industries.

Under the DIS net salary scheme, shipowners pay their employees a net salary and keep the tax for themselves as a government subsidy. Abolishing it and two smaller subsidy schemes would save the government DKK 1.1 billion (GBP 126 million) a year, it estimates.

Metal Maritime/CO-Søfart is the biggest maritime union grouping in Denmark, comprising six member bodies. Some 3,500 of its members work on vessels in the DIS register.

Mr Philipsen believes that removal of the DIS scheme would lead to the Danish fleet reducing in size to that of neighbouring Sweden, with around 100 vessels.

Owners such as DFDS, Esvagt and Torm have already said they would reflag if the proposal goes through.

Henrik Berlau of the Fair Maritim think tank said it is no wonder the Frigast committee looked at the huge subsidies to shipping, given their size. ‘But in addition to the large size of the subsidy, the shipowners have managed the scheme so irresponsibly that you cannot say society has got anything in return. It has been pure support for shareholders.’

Mr Berlau, now retired but once the head of the shipping section of the 3F union, has long campaigned against DIS, especially the law's Section 10, which allows the employment of foreign seafarers on the terms of their home country. Danish trade union bargaining rights for foreign seafarers is banned under Section 10, long a matter of concern to the International Labour Organisation (ILO).

Changing taxation must also mean scrapping Section 10, said Mr Berlau.

He notes with concern the recommendations do not touch tonnage tax, under which owners pay tax on their tonnage rather than income. Fair Maritim is holding a public meeting in March at the Danish parliament to debate government subsidies to Danish shipping.

Business minister Morten Bødskov said the government will now consider the report.