Cyprus: a “Flag of Progress”
The Cyprus Registry has shown phenomenal growth in the last thirty years. In the early eighties Cyprus ranked thirty-second on the list of leading maritime nations. It now ranks among the top ten international fleets – with 1.026 ocean going vessels of a gross tonnage exceeding 20,2 million- and has the third largest fleet within the European Union with a percentage of 12% of the total fleet of the 27 EU Member States.
The classification of Cyprus flag in the “White List” of the Paris and Tokyo MOUs on Port State Control, as well as its exclusion from the “List of Targeted Flag States” of the U.S. Coast Guard reveal our commitment to safety and quality.
The high quality standards of the fleet and the services provided, in combination with a number of fiscal, economic and other benefits offered, make the Cyprus flag the ideal choice for every successful entrepreneur.
The continuous improvement of the existing infrastructure, the incentives available to both residents and non-residents and the enhancement of the international reputation of the Cyprus flag as a quality flag, are our main objectives.
Why Use the Cyprus Flag?
– No tax on income derived from the operation of a Cyprus registered vessel.
– No tax on dividends paid to shareholders of a Cyprus registered vessel, out of profits made from the operation or from the sale of the ship.
– No tax on interest earned on working capital of a Cyprus registered vessel.
– No tax on the income, or profit made from the sale of a Cyprus registered vessel.
– No tax on the wages or other benefits of officers and crew members of a Cyprus registered vessel.
– Competitive ship registration costs and fees.
– Favourable tonnage tax scheme approved by the EU
– No estate duty on the inheritance of shares in a shipowning company.
– Full protection for financiers and mortgagees.
– No stamp duty on ship mortgage deeds or other security documents.
– EU flag.
– Classification of Cyprus flag in the “White List” of the Paris and Tokyo MOUs and exclusion from the “List of Targeted Flag States” of the U.S. Coast Guard resulting in fewer inspections of the ships and less delays at the ports of both MOUs and of the U.S.A.
– Maritime offices in New York, London, Rotterdam, Piraeus, Brussels and Hamburg offering services to Cyprus ships.
– A network of local inspectors of Cyprus ships, covering important ports worldwide in order to ensure efficient and effective control of Cypriot vessels and to avoid detentions by port state control.
– Signatory to all international maritime conventions on safety and pollution prevention.
– Bilateral agreements on merchant shipping with 23 countries, through which Cyprus ships receive either national or favoured nation treatment in the ports of other countries.
– Efficient and qualitative provision of services by the Department of Merchant Shipping.
Opportunities of Joining the Cyprus Maritime Cluster
There is no doubt that Cyprus has firmly established itself as an international business and maritime centre within the EU. The efficient corporate planning opportunities, well regulated solid infrastructure and the sound business platform, are key advantages that encourage entrepreneurs to establish their business on the island.
The accession of Cyprus to the EU has launched a new era of opportunities. Joining the European Monetary Union secured a robust economic performance characterised by price transparency across the euro-zone and exchange rate risk elimination.
The unique geographical position at the junction of three continents, the advanced banking, telecommunications and accounting services, as well as the broad range of tax advantages offered, make Cyprus an ideal location for shipowning, ship management and ancillary shipping-related companies.
Unlike other open registries, Cyprus is also a major base for international shipping operations and for other shipping related activities. In fact Cyprus has, over the years, become one of the largest and widely known shipping centres in the world, comprising both shipowning and shipmanagement companies. Several of the shipmanagement companies which operate on the island, rank among the largest of their kind in the world and it is estimated that they manage about 20% of the world´s third party managed fleet.
In addition, more than 100 companies have been established with shipping related activities ranging from marine insurance, ship chartering, ship broking, financial services, equipment suppliers and telecommunications, to port services, transshipment operations, ship bunkering, shipping agency and ship chandlers.
New Tonnage Tax Scheme
The new tonnage tax scheme for Cyprus merchant shipping was approved by the European Commission on 24th March 2010, as compatible with the requirements of the EU acquis, in accordance with the relevant guidelines on State Aid to Maritime Transport. This simplified tonnage tax system is approved for the first time for an EU Member State, a state with an open registry.
The said scheme was approved for a ten years period, which may be extended for a further period of ten years. The provisions of the Law are applicable for the fiscal year 2010, starting on the 1st January 2010 and will be valid until December 2019.
Highlights of the new tax scheme:
- Based on an annual tonnage tax instead of ordinary corporate tax. The tax will be charged on the basis of the net tonnage of the vessels. ~
- Owners of Cyprus ships will continue to be automatically taxed with tonnage tax.
- Shipowners or charterers or shipmanagers participating in the tonnage tax system, are also exempted from income tax, or any other tax or levy on dividends paid to shareholders, on interest earned on working capital and on any profit made from the sale of a qualifying ship.
- Eligible owners of foreign ships, charterers and shipmanagers have the option to decide whether they should be subject to tonnage tax or not and their decision will be effective for 10 years.
- Only qualifying ships employed in international maritime transport and shipmanagement activities can be included in the tonnage tax system. Other activities eligible for tonnage tax include towage and dredging activities as well as cable –laying activities.
- Innovative provisions of the scheme regarding the taxation of shipmanagers. Shipmanagers providing crew management services and/or technical management services are eligible for tonnage tax.
- Tax exemption on the wages or other benefits derived from the employment of the master, the officers and the crew members of a Cyprus ship.