Shipping in Cyprus and Maritime Law
Cyprus is the largest ship management center in Europe with more than 2500 registered vessels. The governmental interest in making the regulations business-friendly and a robust but simple system of administration make it one of the top choices globally for maritime entrepreneurs. The shipping industry in Cyprus has constantly been gaining on all competition with the government’s constant focus on improvement and efficiency. This has been reflected by significant steps like the founding of an entirely new branch of administration exclusively for shipping, The Deputy Ministry of Shipping, as recently as March 2018.
Undeniable Advantages of Shipping in Cyprus
The geographical location of Cyprus, located at the golden-triangle-of-proximity to Asia, Europe, and Africa, is beneficial to almost all kinds of businesses based here, and multifold more to Shipping corporations. There is no corporate tax for shipping corporations in Cyprus and they only have to pay a customized Tonnage tax according to their net tonnage and not on the direct profits resulting from their business activities. Cyprus has a solid international reputation for legitimacy and transparency by the virtue of meeting all EU regulations and being a signatory to almost all the significant international maritime conventions, in addition to being in the white-list of both Tokyo and Paris MoUs. It also has close to 30 bilateral shipping agreements internationally and more than 55 double tax treaties. It is arguable that one can find lower rates of tonnage tax in a few other jurisdictions but almost none of them specialize in all three aspects of international shipping – ownership, management, and chartering.
Cyprus has one of the most favorable tax regimes not only in Europe but in the whole world, and it balances this extraordinary feat while also adhering to all EU regulations of transparency and data sharing. The businesses have a strong support base from the deeply skilled workforce and English is largely spoken. Island lifestyle is peaceful and relaxed with some of the lowest crime rates in the world.
Here are some of the other advantages and unmatchable tax benefits Cyprus offers to companies and businesses.
The Cyprus legal system has been based mostly on the English law and this holds even truer when it comes to the shipping laws in the country. Some of the main legislation governing the shipping sector in Cyprus are:
* The merchant shipping (masters and seamen) laws, 1963 – 2002
* The merchant shipping (registration of ships, sales, and mortgages) laws, 1963 – 2005
* The Merchant Shipping (Fees and Taxing Provisions) Law, 2010
* The protection of Cyprus ships against acts of piracy and other unlawful acts law, 2012
* The Merchant Shipping (Shipowners Insurance for Maritime Claims) Law, 2012
An exhaustive list of domestic legislation relating to shipping in Cyprus can be found on the government website here. Apart from these Cyprus has also adopted all major maritime conventions relating to environmental protection, oil spillage, pollution, the safety of the crew and seafarers, piracy etc.
The Tonnage Tax System
Since 2010 any owner, manager or charterer of a merchant ship has the option to be taxed under the tonnage tax system which calculates the tax by net tonnage of ships owned or operated by them if the ships in questions qualify under the given requirements. A seagoing vessel certificated under the applicable international or national rules and regulations and registered in the ship register of any member of the International Maritime Organization (IMO) and the International Labour Organization (ILO) which is recognized by the Republic of Cyprus, is considered a Qualified Ship. Any activity constituted out of maritime transport (goods or passengers) or ship management is considered as a Qualifying Activity. Owners of Cyprus ships fall under the tonnage tax system without having to opt for it as long as the ship is qualified and engaged in a qualified activity. Owners of foreign ships and charterers in general, in order to be taxed under the tonnage tax, have to opt for it and must be a tax resident of Cyprus along with meeting all the other requirements for the owners of a Cyprus ship. The owners of foreign ships have to further meet the Community-Flagged Share requirements, and the charterers have to meet Minimal Share in Ownership requirements in addition to Community-Flagged Share requirements.
Cyprus offers three options for ship registration; provisional, permanent and parallel registrations are possible. In order to register a ship in Cyprus, The merchant shipping (registration of ships, sales and mortgages) laws mandate that, one must prove a minimum of 50% ownership by Cyprus citizens or in case of any other EU citizens owning the same minimum 50% – appointment of a representative in Cyprus is additionally required. Cyprus allows for an initial provisional registration of a vessel.
provided it is out of the territorial waters of the Republic at the time of registration. As in many other application procedures in Cyprus, the services of a lawyer are essential, and the application must be signed and forwarded only by a lawyer. The provisional registration gives enough time for arranging all required documents and is valid for 6 months which can be extended for a further period of three months twice. Some of the main documents required are the test certificates of the vessel, insurance, certificates of the owning company along with the minutes of meetings of BoD regarding the acquisition or reflagging of the ship, deletion certificate from the previous registry where applicable etc. Parallel registration is one of the special features provided by the Cyprus jurisdiction and via this one can maintain the original of their vessel while also obtaining a registration in Cyprus for a set, finite period of time. A parallel-in registration is when Cyprus is the second jurisdiction of registration and is done with bareboat chartering mostly. A parallel-out registration is when a bareboat already registered in Cyprus has to be taken for the second registration in another jurisdiction.
We Help with all Aspects of Shipping in Cyprus
Maritime law requires finesse like no other. It requires specialized expertise and deep knowledge to adhere to the innumerable conditions and to ensure every requirement has been fulfilled. Simon Zenios & Co specializes in the registration of ships, taxation according to the TTS, incorporation of shipping companies etc. For owners based out of Cyprus we provide help in finding representatives who would satisfy the condition to opt for Tonnage Tax System (TTS). We provide comprehensive services for all steps of the way so that you do not have to worry about any part of your shipping business. We are proud of our ever-growing clientele of big and small shipping corporations and the versatility of our portfolio, as we represent owners, charterers and ship-managers alike. We are always available for any queries you might have relating to any aspect of the shipping business in Cyprus or in the EU. Only a click away from all the answers and solutions.