OUR APPROACH TO TAX

 

INTRODUCTION

Royal Caribbean Group (“RCCL”) is a publicly traded cruise line company with worldwide operations that responsibly delivers world-class and memorable vacations to guests worldwide. RCCL operates three brands: Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. In addition, we have joint venture interests in TUI Cruises and Hapag-Lloyd Cruises.

RCCL is headquartered in Miami, Florida, but since 2010, it has the head office of its international operations located in the United Kingdom (UK). The UK presence comprises three entities (hereinafter referred to as “RCCL UK”): RCL Cruises Ltd, RCL UK Ltd, and RCL Investments Ltd, all incorporated and tax resident in the UK. Our UK operations can be grouped into two main activities:

  • The operation of vessels for the RCCL international market; and
  • The international (non-Americas) headquarters for the RCCL group.

RCCL chose to invest in the UK by opening its head office for international operations in Weybridge, England, in 2010. RCCL UK has been a significant investor and economic contributor in the UK, creating hundreds of local jobs and providing training for its UK maritime through its UK Cadet Program and non-maritime personnel while contributing to several aspects of the local economy. As a committed investor in the UK maritime industry, RCCL UK has been able to enjoy the benefits of the UK tonnage tax regime, in particular, the certainty that it provides us over our tax liabilities.

RCCL’s mission statement and values are the guiding principles followed by the RCCL UK board, which ensures the business is managed according to these principles. As part of these values, RCCL UK requires that its employees commit to acting in the highest ethical manner while enhancing the well-being of the communities where our business is conducted.

OUR TAX PRINCIPLES

RCCL UK is committed to being a responsible global citizen. We follow global rules, regulations, and guidelines in accordance with our Code of Business Conduct and Ethics and expect our advisors, employees, and other parties to do the same. Our approach to tax is summarized by our tax principles, which are approved by the Board of Directors and are closely aligned with the group’s core values and business strategy. In particular, RCCL UK will:

  • Comply with all relevant laws and regulations.
  • Consider tax in all major or complex business decisions.
  • Meet all legal requirements and make all appropriate tax returns and tax payments.
  • Comply with appropriate tax controls and processes and ensure there is sufficient Board oversight into this compliance.
  • Use incentives and reliefs to minimize business tax costs in a manner which is consistent with the UK government’s policy objectives.

UK TONNAGE TAX

A key aspect of our corporation tax affairs in the UK relates to our election in the UK tonnage tax regime.

UK tonnage tax is a tax regime introduced by the UK government. It is designed to encourage shipping companies to base their shipping operations in the UK and is consistent with the EU’s maritime policy. It does so by providing a simple method of calculating the profits that should be subject to UK corporation tax and is based on the tonnage of the operated vessels rather than company profits.

To elect into and benefit from the tonnage tax regime, RCCL UK must meet a number of requirements that are strictly enforced by His Majesty’s Revenue and Customs (“HMRC”). In particular, RCCL UK is required to make an economic contribution to the UK through the strategic and commercial management of our vessels in the UK.

RCCL UK non-shipping activities in the UK are subject to standard UK corporate taxes. RCCL UK pays several other UK taxes, including employment and indirect taxes. Taxes, fees, and additional charges, including port and passenger taxes, are incurred in the UK and other countries where our ships call.

OUR TAX RISK MANAGEMENT AND GOVERNANCE

The board of directors of RCCL UK recognizes the importance of maintaining robust tax compliance processes and considers it key to managing tax risk. Board members regularly discuss tax matters, including monitoring changes to tax law assessing their impact, and evaluating material risk, with the RCCL Corporate Tax Department, and tax plays an important role in Board business decisions.

RCCL UK is very risk averse, and we adopt a conservative approach as regards to tax matters.

In order to ensure that we effectively comply with our UK tax compliance requirements, including those related to UK tonnage tax, RCCL UK has created a set of processes and controls that are regularly reviewed and maintained for the purposes of Senior Accounting Officer1 (SAO) compliance.

RCCL UK is committed to complying with all relevant laws and regulations in all jurisdictions where the group operates. Tax Management is performed through the RCCL Corporate Tax Department and in constant collaboration with the RCCL UK business and finance department to provide the guidance and advice needed to ensure compliance with tax laws and regulations, especially those governing UK tonnage tax.

At a global level, RCCL’s corporate tax department is overseen by the RCCL Audit Committee of the Board of Directors. The Vice President of Global Tax is responsible for implementing our approach to tax. The team is responsible for ensuring that policies and procedures supporting the approach are in place and that the tax group has the required skills and experience.

OUR APPROACH TO TAX PLANNING

Tax planning opportunities must have a clear commercial rationale, be approved by the Board, and be evaluated with current tax rules in mind while considering the legislator’s intention. Where there is uncertainty about applying or interpreting the tax laws, appropriate written advice evidencing the facts, risks, and conclusions will be obtained from third-party advisers to support the decision-making process. RCCL UK does not engage in aggressive tax planning and does not enter into transactions for the sole purpose of gaining a tax benefit.

OUR RELATIONSHIP WITH HMRC

RCCL UK is committed to engaging transparently and proactively with HMRC. The company’s UK tax affairs and past and proposed operations are discussed in an annual meeting with HMRC. Furthermore, the company maintains ongoing communication with HMRC to discuss and conclude on areas where the application of legislation to our facts is uncertain, ensure compliance with UK tax laws and regulations, and communicate changes to our business and tax affairs in advance to HMRC.

This document is published in accordance with paragraphs 19(2) and 22(2) of Schedule 19 of the Finance Act 2016 and relates to the accounting period ended 31 December 2023.

 

1 The Senior Accounting Officer (SAO) is the individual who is responsible for certifying to HMRC that our UK incorporated companies have appropriate tax compliance arrangements.

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