The Republic of Cyprus has a longstanding history of being an epicenter for sailing and maritime trading. With a modern and attractive shipping scheme, ship or yacht registration in Cyprus has never been easier or more beneficial for anyone searching for the best global shipping center and some of the most luxurious new marinas in Europe.
The Aspen Trust Group explains the types of yacht registration in Cyprus, the latest in world-class marinas in the country, and the advantages that the Cyprus flag offers for maritime activities.
A History of Shipping in Cyprus
Throughout its history, Cyprus has been utilised for maritime trading by the Egyptians, Greeks, French, Venetians, Romans, and even the British. Given its ideal geographical position, the island has been an ideal maritime location.
During the 1960s, the business and commercial sectors of the island’s economy modernized and expanded, solidifying the Republic of Cyprus as an international center for commerce and business. From the re-opening of the Suez Canal to the growing importance of Middle Eastern oil reserves, Cyprus has been a key destination for facilitating the world’s shipping needs.
Recognizing the significance of maritime business activities, this Mediterranean jurisdiction began attracting entrepreneurs on the island by establishing advanced shipping infrastructure and profitable policies for those selecting ship or yacht registration in Cyprus that have major implications for the shipping industry.
Currently, the Cyprus Registry is the 3rd largest fleet in the European Union and the 11th largest merchant fleet worldwide, accounting for more than 1000 vessels and 21 million gross tons. The city of Limassol holds the place for the largest third-party ship management center in the EU and the Cyprus flag manages roughly 20 percent of the world’s third-party ship management fleet.
Benefits of the Cyprus Flag
Ship registration in Cyprus offers many advantages for the operation or management of vessels registered under the Cyprus flag.
Some of the tax benefits include:
- No tax on the operational or management profits on Cyprus-registered ships
- No tax on income or dividends received from a ship management company
- No capital gains tax on the sale, transfer, or shares of a ship-owning company
- No estate duty imposed on inheritance
- No income tax imposed on the wages of the officers or crews
- Low tonnage tax based on gross tonnage
- No stamp duties for ship mortgage deeds or security documentation
- More than 43 countries have double tax treaties with Cyprus
Other benefits include:
- Attractive, low-cost registration of a ship
- Low operating cost for Cyprus-owned companies
- European Union Flag and access to the European economic area
- Cyprus has signed all international maritime conventions regarding pollution and safety
- More than 23 countries have bilateral agreements with Cyprus for favored treatment in worldwide ports
- Maritime offices around the globe
- Highly skilled professionals and infrastructure in place
- White-listed high-quality flag recognized globally
Benefits of Yacht Registration in Cyprus
Besides the above advantages of registering a vessel, yacht registration in Cyprus has some additional benefits. Foremost, yachts and yacht-owning companies enjoy the same rewarding taxation policies as well as a simple registration process. The country has a network of local inspectors for yachts with far-reaching services in significant ports all over the globe.
Moreover, yacht registration with a Cyprus flag can be done without the vessel being in the country at the time of registration. Costs and management of yachts specifically are some of the lowest in Europe, and new marina developments around the island make Cyprus a convenient and rewarding registration jurisdiction.
The Basics of Ship and Yacht Registration in Cyprus
Types of Ship Registration
The registrar of Cyprus ships has three different types of shipping vessels classification societies:
- ‘Provisional’ Registration: This applies to the registration of ships for 6 months. It can be renewed one time for an additional 3 months.
- ‘Permanent’ Registration: The most common registration of a ship option in Cyprus. If a provisionally registered ship requires permanent registration, it must be done within 6 months, or 9 months if the extension is applied.
- ‘Parallel’ Registration: Divided between two categories, parallel registration applies to foreign vessels of a Cyprus shipping company under bareboat charter to gain the Cyprus flag most often for 2 years (parallel-in) or owners of Cyprus vessels to choose to bareboat charter the ships to a foreign company/person for parallel registration in a foreign register for the length of a charter party (parallel-out).
Most yacht owners or yacht-owning companies choose to focus on permanent registration for their vessel through first establishing provisional registration. The tax schemes and other policy benefits attract foreign shipowners and shipping companies as a flag state but also a principal place of business.
The Merchant Shipping Law of 1963 is the governing Law for ship registration in Cyprus and the related maritime transactions under the Register of Cyprus Ships or the Special Book of Parallel Registration.
All applications are considered by the Registrar of Cyprus Ships under the Office of the Shipping Deputy Ministry, located in Limassol.
Consultation, especially for non-Cypriot citizens is encouraged to ensure all necessary documents and transactions are completed correctly.
Necessary documents for both ship and yacht registration in Cyprus, usually in English, include:
- The Declaration of Ownership, including corporate certificates if the owner is a company or identification papers if the owner is a person
- Company Memorandum
- Articles of Association
- Builder’s Certificate or Bill of Sales
- Other documents depending on individual application cases
The Registrar will deny an application if a ship is banned on Port State Control grounds of any member state in which Cyprus is included in the Memoranda of Understanding at the time of application. Also, if the ship has been detained on at least 3 occasions during 2 years before the application on Port State Control groups by the US Coast Guard or States of Memoranda of Understanding. Ships constructed or purported to be used exclusively for inland navigation will not be accepted.
The first step is to consult and appoint an authorised representative to determine the application requirements. Next, the payment of fees and taxes is required before the registration of a ship. Provisional registration may be able to be completed abroad by approved consular officers of Cyprus per the instructions of the Republic of Cyprus. Finally, all documentation for the application is submitted for approval.
Two circumstances allow for ship or yacht registration in Cyprus based on meeting ownership criteria.
If more than 50% of the shares are owned by a Cypriot citizen, other EU member state, or European Economic Area, a ship may be registered in the Register of Cyprus.
A vessel may also be accepted if the total amount of the shares are owned by one or more companies that are established and operating in accordance with the laws of Cyprus, EU member state, or EEA member state. If the vessel is outside Cyprus or the member states but is controlled by a Cypriot citizen or other member state citizen, the application success is possible.
It is always best to work with professional consultants to ensure efficiency and accuracy when applying for ship registration in Cyprus.
VAT Scheme for Yachts
New guidelines establish the Cyprus yacht VAT policy using the VAT Leasing Scheme. Under the scheme. Yacht registration in Cyprus leads to VAT rates as low as 3.4% of the principal value of the yacht. Even other favorable jurisdictions, such as Malta, do not have effective VAT rates this low.
Through the scheme, a Cypriot company may purchase a yacht and join a lease-sale agreement involving the yacht and a third party. This third party may be an individual or a company from any jurisdiction.
Using this method establishes the service as within Cyprus and only VAT is due on the lease at a rate of 17%, but only payable on the leasing portion in which the yacht is within EU waters. While this may seem difficult to calculate the exact duration of time in EU waters, VAT authorities have created a percentage scale to determine “presumed” duration. Most 24+ meters sailing vessels are deemed in EU waters 20% of the time and reduce the VAT rate to 3.4%.
In addition, yachts are not required to come to Cyprus and the leases must not exceed a period of 48 months.
Only one company is necessary for the scheme. The yacht may be “bought” by a Cyprus company, often deemed as a loan, and then the company leases the yacht back to the original owner. Using this process, yacht registration in Cyprus does not need to be changed. Although one stipulation of the scheme is that qualifying yachts will have a T2L certificate stating it was manufactured in the EU.
Full Sail Ahead with Luxurious Cyprus Marinas
The Cyprus VAT Scheme for yachts is not the only new development when considering yacht registration in Cyprus. A wave of luxurious, modern marinas has made the island their home and excited yacht owners with their premium features.
Ayia Napa Marina
This exclusive marina complex will host a range of villas, shops, and restaurants. More impressively, it will hold 600 yachts in both wet and dry storage. Wet slips can fit yachts up to 85 meters while dry storage accommodates boats up to 10 meters. Hassle-free service includes premium valet services and floating docks for easy access. Superyachts can enjoy marina depths of up to 7 meters and a harbor designed to provide safe and relaxed berthing. The boatyard will provide a large selection of maintenance services and around-the-clock assistance.
The latest waterfront development of Limassol, the center of shipping in Cyprus, Limassol Marina is everything a yacht owner needs in a luxury marina. Equipped to fit 650 berths for yachts up to 110 meters, Limassol Marina excels in service and elegance. The concept of “living on the sea” is extended to their yacht services, luxury apartments and villas, and dining and shopping facilities.
Larnaca Port and Marina
Steeped in history and culture, Cyprus has taken an active approach in embracing its unique location. One of the largest infrastructure projects this year has been the redevelopment of the historic Larnaca Port and Marina. Citizens and foreign yacht owners can enjoy the expansion in one of the 650-boat slips that accommodate boats of 5 to 150 meters. New boat repair services and a vision of encompassing various types of clients make the Larnaca Port and Marina a sought-after leisure destination.
The wait for Paphos Marina is one of the top reasons for yacht registration in Cyprus. When completed, the huge Paphos Marina will be able to house 1,000 boats and 45,000 square meters of recreational space. The marina is the first of its kind in Paphos and more importantly the largest on the island.
Why Choose Cyprus for Registration of a Yacht or Ship?
There are many reasons why it is best to register a ship or yacht in Cyprus over other global jurisdictions. Not only does Cyprus have a longstanding history of maritime shipping and trade experience, but it is also one of the few approved European Tonnage Tax systems in the world. While Malta is the other country that also shares approval of the Tonnage Tax system, from 2012-2018, it was being reviewed by European Commission for meeting the international guidelines and regulations pertaining to taxation. The Commission decided that it did generally meet the requirements and has continued to revise its policies to ensure better clarity and regulation standards. Cyprus has maintained a favorable system worldwide and is considered among the US and European countries to have a high quality and compliant system. Oftentimes, enabling vessels under the Cyprus Flag have fewer issues with security and scrutiny, a big advantage of the ship or yacht registration in Cyprus.
Another benefit is the professional quality of Cyprus’s maritime industry. While other popular jurisdictions, such as Panama, have lower wages and service costs, there is less consistency and quality among businesses within the shipping industry. Many maritime jurisdictions have been denoted as Flags of Convenience which pose problems for the management and operation of vessels in international ports. Cyprus has the approval of not only the European Commission but also the OECD.
Finally, ship and yacht registration in Cyprus is one of the cheapest in the world. Compared to maritime centers, including the UK, Cyprus has low registration costs and attractive service prices for ship management companies. The advantages of the tax regime also provide ideal situations for shipping companies to optimize taxes and for yacht owners to enjoy the VAT Scheme. Moreover, the Cypriot government has been considering eliminating registration fees, which could lower future costs to register a ship in the near future.
Overall, yacht registration in Cyprus offers a vast number of benefits for the registration, management, and operation of vessels. High-end marina developments are making waves in the boating community and put yacht owners in the heart of vibrant culture, scenic landscapes, and ultra-luxury. The Aspen Trust Group is ready to set up a consultation with you to get the most out of your ship or yacht registration in Cyprus with our many services. Contact our experts and let us prepare the necessary documents in a timely and professional manner.