Changing to a foreign flag

• Temporary change to a foreign flag is possible
• Compensation for German shipping sector
• Compensation with a training position (primary obligation)
• Compensation payment (secondary obligation)
• National flags approved for change to foreign flag
• Sanction measures against Russia

Temporary change to a foreign flag is possible

The German legislator gives shipping companies or operators under certain conditions the permission to change to a foreign flag for a limited amount of time. In accordance with § 7 of the “Flaggenrechtsgesetz” (flag act), the ship remains registered in a German shipping register throughout the change to a foreign flag but receives the permission to fly a foreign flag.

• Antrag auf zeitweise Ausflaggung (Ausbildungsverpflichtung) (application for limited operation under a foreign flag (training obligation) - in German only)
• Antrag auf zeitweise Ausflaggung (Ablösebetrag) (application for limited operation under a foreign flag (compensation payment) - in German only)
• Guide - Electronic Forms
  
  

A flagged-out ship is subject to the law of the foreign flag. The only exception is, under certain conditions, social security for German crew members on foreign flagged ships. More information about this under "Social Security".

The responsible Federal Maritime and Hydrographic Agency (Bundesamt für Seeschifffahrt und Hydrographie – BSH) can permit the change to a foreign flag for two years. Shipping companies and operators can repeatedly apply for a permit for limited operation under a foreign flag.

Compensation for disadvantages suffered by the German shipping sector

According to the “Flaggenrechtsgesetz (flag act), the BSH may only permit a change to a foreign flag if the shipowner or operator proves that he has compensated the disadvantages suffered by the  German shipping sector because of the change of flag. This compensation can either be done

• by filling a maritime training position on board the respective foreign flagged ship (primary obligation) or
• by making a compensation payment (secondary obligation).

Depending on the chosen option a different application form for a change to a foreign flag is to be submitted to the BSH.

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Compensation with a training position (primary obligation)

The shipowner or operator can compensate for the disadvantage of the German shipping sector by training either a ship mechanic or a navigational or engineering assistant officer on the flagged-out ship. Depending on the size of ship, the required duration of the training obligation on board the flagged-out ship so that no compensation payment becomes due varies.  It can be between one and 5.5 months for every year of the permission for limited operation under foreign flag; further information is given in "Hinweise zur Ausbildungsverpflichtung" (notes regarding the training obligation, in German only) and in the annex second sentence of § 7(2) of the "Flaggenrechtsgesetz" (German flag act). The respective period of time that a training position must be offered begins with the permit for limited operation under foreign flag entering into force.

The BSH will verify, whether the training obligation has actually been fulfilled. If training is not or no longer performed the compensation payment is due from the date the permit for limited operation under foreign flag had become effective.

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Compensation payment (secondary obligation)

If a shipowner or operator cannot or does not want to train, alternatively, he can make a compensation payment to the “Stiftung Schifffahrtsstandort Deutschland” (German shipping foundation).  The amount of the annual compensation payment depends on the size of the ship and is published in the Federal Gazette (Bundesanzeiger). Legal basis for the obligation to make compensation payments is the fourth sentence of § 7(5) of the Flaggenrechtsgesetz (German flag act).

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National flags approved for change to foreign flag

Flag states approved for the permission to fly a foreign flag acc. to § 7 of the “Flaggenrechtsgesetz” (flag act)

The criteria for the recognition as flag state approved for change of flag include the membership at IMO, the ratification of the International Convention for the Prevention of Pollution from Ships (MARPOL) and the International Convention for the Safety of Life at Sea (SOLAS), port state control performance and unobjectionable foreign policy.

If a change of flag is intended for a country that is not on the list provided above via a link, the BSH has to initiate an approval procedure with the Federal Ministry of Digital and Transport (BMDV) with the participation of the Federal Foreign Office. As the BSH is not the leading authority in this approval procedure, it has only limited influence on how long it takes.

Therefore, please approach the BSH as soon as your plans become more concrete. Please name the ship, the owner and the timespan of flying a foreign flag or submit the "Antrag auf zeitweise Ausflaggung" (application for limited operation under a foreign flag). Please state your reasons (e.g. service commitment of the ship) why the ship is intended to change to the requested foreign national flag.

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Sanction measures against Russia: Flag services

As of 5 December 2022 or 5 February 2023, European Economic Participants may only carry crude oil and petroleum products of Russian origin via maritime transport to third countries and perform the associated services such as technical assistance, brokering services, financing or financial assistance if said crude oil or petroleum products have been acquired at or under the prices stipulated by regulation by the EU Commission.

Article 3n of Council Regulation (EU) No. 833/2014, by which saction measuers against Russia are implemented, also covers "Flag services" by the respective Flag State. This means that, in case a permission covered by flag law is sought-after for a ship that can carry crude oil and petroleum products, either the exclusion from transport of Russian oil or the price limits for transport of goods covered by Annex XXVIII to third countries has to be proven in addition to providing the information and supporting documents required under German flag law.

As assistance as to how the conditions of Article 3n of Council Regulation (EU) No. 833/2014 are to be implemented and interpreted, a Guidance on oil price cap has been developed and published by bodies of the Commission.

Please note that the requirements for the attestations to be submitted changed as of 20 February 2024. Since then, these have to be issued per voyage (‘per-voyage’ attestation). The guidance on the oil price cap has also been up-dated and now also answers questions regarding this amemdment of the Council Regulation (EU) No. 833/2014. 

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