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HMRC internal manual

Tonnage Tax Manual

Background Material: Seafarers

Double taxation agreements and offshore activitiesSome double taxation agreements (DTAs) contain articles relating to offshore activities. These articles include provisions for the treatment of activities in connection with the exploration or exploitation of the seabed, sub-soil and their natural resources.

There may be provisions for the taxation of income from employment in connection with such activities. Generally employment income is taxable by the state where the activities are being performed.

Exceptions to general ruleHowever there are exceptions. For example, the employment income of a seafarer performing duties on certain types of ship:

  • supply vessel,
  • tug, and
  • anchor handler,in either the designated areas of the Continental Shelf of either:

  • UK, or
  • Norwayis taxable only in the state of which the person deriving the profits from the operation of the ship is a resident. If that state is the UK, then UK income tax will need to be deducted under PAYE

In such circumstances, the residence status of the employee will be of no significance to the employer when operating UK PAYE. Neither will be the country where the vessel is flagged.


Guidance for seafarers and employers TTM15300
Employers TTM15380
Double taxation agreements TTM15390