Vessels and pleasure yachts registered with the Cyprus Registry and their owners benefit of the tax advantages offered by the Republic of Cyprus but also of the various benefits that Cyprus offers as a modern, efficient and integrated shipping cluster ranked amongst the leading in the world.
The advantages and benefits of the Cyprus Registry include the following:
- A European Union approved “Open Registry” -EU Flag with legally endorsed Tonnage Tax;
- No tax on profits from the operation or management of a Cyprus-registered vessel or on dividends received from a vessel owning company*;
- No officers and crew nationality restrictions;
- No income tax on the wages of officers and crew;
- Low registration costs;
- No stamp duty on ship mortgage deeds or other security documents;
- Vast network of Double Tax Treaties;
- Full protection for financiers and mortgagees.
- No inheritance tax or estate duty on the inheritance of shares in a ship owning company;
- Included in the “White list” of Paris and Tokyo MoUs regarding safety standards and exclusion from the “List of Targeted Flag States” of the US Coast Guard which translates to fewer inspections of the vessel and less delays at the calling ports and marinas;
- Maritime offices in Piraeus, London, New York, Hamburg, Rotterdam and Brussels available 24/7 to assist;
- Parallel (Bareboat) Registration is permitted.
CONDITION OF OWNERSHIP
A ship may only be registered in the Register of Cyprus Ships if:
- more than fifty per cent (50%) of the shares of the ship are owned:
a. by Cypriot citizens, or
b. by citizens of other Member States (EU/EEA) (an appointed authorised representative in the Republic of Cyprus is required); or
- the total (100%) of the shares of the ship are owned by one or more corporations, which have been established and operate:
a. in accordance with the laws of the Republic of Cyprus and have their registered office in the Republic, or
PROVISIONAL AND PARALLEL REGISTRATION
b. in accordance with the laws of any other Member State (EU/EEA) and have their registered office, central administration or principal place of business within the European Economic Area and which will have either appointed an authorised representative in Cyprus or ensured that the management of the ship is entrusted in full to a Cypriot or a Community ship management company having its place of business in Cyprus, or
c. outside Cyprus or outside any other Member State (EU/EEA) but controlled by Cypriot citizens or citizens of Member States and have either appointed an authorised representative in Cyprus or ensured that the management of the ship is entrusted in full to a Cypriot or a Community ship management company having its place of business in Cyprus.
A ship may be registered provisionally with the Cyprus Registry and such may remain under provisional registration for six months with a possibility for a renewal of further three months.
The permanent registration of a provisionally registered vessel must be effected within six months (or nine months as the case may be (see above)) from the date on which she was provisionally registered.
BAREBOAT CHARTER REGISTRATION (PARALLEL REGISTRATION)
The Merchant Shipping (Registration of Ships, Sales and Mortgages) Law of 1963, as amended, provides for two forms of parallel registration: the “Parallel-in” registration and the “Parallel-out” registration of vessels, provided certain prerequisites are satisfied.
The bareboat registration of foreign and Cyprus ships under the Cyprus regime may be affected with more than 20 States whose legislation is compatible with the Cyprus legislation.
A foreign flagged vessel on bareboat charter to a Cyprus shipping company may be registered in parallel under the Cyprus flag. The registration will be made in the Special Book of Parallel Registration.
The deletion of the ship from the registry of the State where its ownership is registered is not required. However, its right to fly the flag of the State of registry and to have its nationality is suspended and the foreign registry remains operative only with respect to the ownership and encumbrance’s status of the ship.
A Cyprus registered ship may be bareboat chartered to a foreign person (physical or legal) and be registered in “Parallel” in a foreign register for the duration of the charter party.
Crew members may be of any nationality provided they are holders of certificates of competency recognized by Cyprus. Officers have to apply for endorsement of their certificates of competency in accordance with the STCW 1978 Convention, as amended from time to time. Cyprus recognises the certificates of competency of 65 countries.
Creation, registration and treatment of mortgages is mainly governed by the Merchant Shipping (Registration of Ships, Sales and Mortgages) Law 45/63.
A mortgage once created must be deposited with the Registrar of Cyprus Ships or with a consular officer on the instructions of the Registrar. The mortgage is recorded in the Register as from the date and hour of its deposit and remains an encumbrance on the ship until discharged.
A mortgage may be created independently of whether the ship is provisionally or permanently registered. If the ship on which a mortgage was created belongs to a Cypriot company, the mortgage will also have to be registered with the Registrar of Companies. The mortgagee’s security is protected in the case of liquidation of the ship owning company.
“Age” means the age of the ship which is calculated by deducting the year in which the keel of the ship was laid from the year in which the provisional, direct permanent or parallel-in registration takes place.
In case a ship has undergone major conversion or reconstruction, the year in which the major conversion or reconstruction began may be taken into account (in lieu of the year in which its keel was laid) for the calculation of the age of the ship, provided the ship, at the end of the major conversion or reconstruction, complied with all the requirements of the applicable international treaties to which Cyprus is a Party-Signatory, as if it was a new ship whose keel was laid in the year in which the major conversion or reconstruction begun. In such a case the application for the registration of the ship should be accompanied by documentation from the recognized organization which is surveying and certifying the ship on behalf of its flag State or from its flag State attesting so.
An entry inspection and additional inspections are required to be carried out in case the ship is older than a pre-set age by the Department of Merchant Shipping.
This note is intended to provide general information on the subject and does not constitute legal advice. For further information on the subject and for specific legal advice please contact us .