A.G. GEORGHIOU & CO
Certified Public Accountants

SHIPPING IN CYPRUS

Registration

The appropriate authority for the registration of a ship under the Cyprus flag is the Department of Merchant Shipping. The law regulating ship registration is the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963 as amended.

Under the provisions of the law, a ship may be registered under the Cyprus flag provided that more than 50% of the shares of the ship are owned:

By a Cypriot.

By a company established and operating in Cyprus and having a registered office in the Republic.

By a company incorporated outside Cyprus with the controlling interest vested in Cypriots, if especially authorized by a decision of the Council of Ministers.

A non Cypriot may become owner of a Cyprus ship by registering a company in Cyprus.

With the permission of the Central Bank of Cyprus non-residents may be allowed to register a Cyprus ship owning company provided that it derives its income from activities outside Cyprus. Such companies are offered the status of offshore companies and are considered non-resident for exchange control purposes.

Age limit of ships.

Ships of any type and tonnage not exceeding 17 years of age may be registered under the Cyprus flag.

Ships of any type and tonnage between 18 to 20 years of age may be registered subject to fulfilling certain conditions.

Provisional registration.

A provisional registration is necessary in the case of ships eligible for registration which are not in a Cyprus port at the time of registration. This can be affected at any place where Cyprus has an Embassy, a Consulate or an Honorary Consul. Provisional registration is valid for six months and may be renewed for a further three month period. Provisionally registered ships must be permanently registered within the stipulated provisional period.

Application for registration of a ship in the Cyprus Register of ships must be submitted to the Minister of Communications and Works through the Registrar of Cyprus ships.

Permanent registration

Permanent registration of a provisionally registered ship is effected by the Registrar of Cyprus Ships and must take place within the specified provisional registration period of a maximum of nine months. It is not necessary for the ship to be present in a Cyprus port.

Deletion

Ships may be deleted from the Cyprus Register of Ships where the shipping laws or regulations have not been adhered to or upon the disposal of the ship.

All financial obligations to the Cyprus Authorities must be settled and existing mortgages on the ship discharged at the time of deletion.

Ship's crew

Although there are provisions under the Cyprus law that at least 15% of crew members must be Cypriots, due to the non availability of Cypriot seamen such provisions are dispensed with and crew may be of any nationality holding recognized certificates of competency.

Taxation advantages

Ship owning companies registered in Cyprus are completely exempt from income tax on profits derived from operations in international waters.
No tax is payable on the salaries of the crew of Cyprus ships which operate in international waters.

No capital gains tax is payable on disposal or transfer of a ship or shares in a shipping company.

No tax is payable on any dividend received from a Cyprus shipping company.

No estate duty is payable on the inheritance of shares in a shipping company.

Ship management companies owned by non residents and managing ships operating in international waters pay income tax on their profits at the rate of 4.25.

Fees

Provisional registration fees.

The fee per gross ton up to 5.000 gross tons is 10 cents, between 5.001 and 10.000 gross tons 8 cents, and for each additional gross ton over 10.000 4 cents. The minimum fee is C£125 and the maximum C£3.000. For passenger ships for each gross ton is 15 cents, with a minimum fee of C£250.

Permanent registration fees.

No other fee is payable if the permanent registration takes place before the expiration of the provisional registration period otherwise the above fees are payable anew.

Parallel registration fees.

The fees for the parallel registration of a ship are 20% higher than those applicable to the provisional or permanent registration of a ship.

Fees for registration, transfer or discharge of mortgages.

The fees payable are as follows:

2 cents per gross ton up to 10.000 gross tons.
1 cent per gross ton for each additional gross ton over 10.000 gross tons.
Minimum fee C£30.

No fee is payable on the discharge of mortgages.

Annual tonnage tax.

A fixed amount of CY£100 plus:

Gross tons Cents.

For each gross ton up to 0 - 1.600 26,0
For each additional ton between 1.601 - 10.000 16,0
" " " " " 10.001 - 50.000 6,0
" " " " over 50.000 4,0

The resulting figure from the above calculation is then multiplied by the corresponding rate as follows:

Age of ship in years Rate.

Up to 10 0,75
11 - 20 1,00
over 20 1,30

For passenger ships the annual tonnage tax is twice the amount applicable to other ships.

Radio station fees.

There is a €17 installation fee, and a €17 license renewal fee per year.

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