Cyprus has a longstanding history of being an epicenter for sailing and maritime trading. With a modern and attractive shipping scheme, ship registration in Cyprus has never been easier or more beneficial for anyone searching for the best global shipping center.
The Aspen Trust Group explains the types of ship registration in Cyprus 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 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
- 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
The Basics of Ship Registration in Cyprus
Types of Registration
The registrar of Cyprus ships classifies three different types of shipping vessels:
- ‘Provisional’ Registration: This is applicable 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).
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, 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 work with the necessary advisor 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 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 owned by one or more companies which 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 whenapplyingfor ship registration in Cyprus.
Why Choose Cyprus for Registration of a Ship?
There are many reasons why it is best to register a ship in Cyprus over other global jurisdictions. Not only does Cyprus have a longstanding history of maritime shipping and trade experience, 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 decision of the Commission was 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 to have less issues with security and scrutiny.
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 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. Moreover, the Cypriot government has been considering eliminating registration fees, which could lower future costs to register a ship in the near future.
Overall, ship registration in Cyprus offers a vast number of benefits for the registration, management, and operation of vessels. The Aspen Trust Group is ready to set up a consultation with you to get the most out of your ship registration in Cyprus with our many services. Contact our experts and let us prepare the necessary documents in a timely and professional manner.