Shipping in Cyprus and Related Legal Affairs

Athena Chrysostomou, Maritime Affairs Officer, Department of Merchant ShippingSaturday 23 June 2012, Le Meridien Hotel, Limassol

WHY CYPRUS ?AN OPTIMAL BUSINESS BASE

Cyprus Registry:

Fleet of 1840 vessels exceeding 22 million gross tonnage

Ranks 3rd in terms of tonnage among the EU Member States merchant fleet

Ranks 10th worldwide

Part 1: Registration of ships in the Register of Cyprus Ships

Part 2: Tax Incentives

Part 3: Other Shipping Related Incentives

Ownership Requirements:

Citizens of the EU/EEA, or

EU/ EEA registered legal entities, or

Non EU/ EEA registered legal entities controlled by EU citizens.

Part 1- Registration of ships in the Register of Cyprus Ships

Related conditions

Type of shipMaximum

age limit

Entry inspection

required

Additional inspection

required

Cargo ships and Cargo High Speed CraftYes

≤ 25 years

Yes

if ≥ 15 yearsNo

Passenger ships and Passenger High Speed Craft engaged on international or short international voyages

NoYes

if ≥ 30 years

YES if 2 years ≤ Age ≤ 10 years Biennial

YES if Age > 10 years Annual

Passenger ships and Passenger High Speed Craft engaged on domestic voyages within the territory of a State, other than Cyprus

NoYes

if ≥ 25 years

YES if 2 years ≤ Age ≤ 10years Biennial

YES if Age > 10 years Annual

Passenger ships and Passenger High Speed Craft engaged on domestic voyages within the territory of Cyprus

NoYes

if ≥ 20 years

No In order to operate they are required to be inspected

and certified annually

“Cargo ship” means a ship which has been constructed or adapted for the purpose of carrying cargo in any form.

“Passenger ship” means a ship which has been constructed or adapted for the purpose of carrying fare-paying passengers.

Government Policy on the Registration of Ships (DMS Circular 12/2012 dated 7.3.2012)

Part 1- Registration of ships in the Register of Cyprus Ships

Provisional Registration

Permanent Registration

Parallel –In (Bareboat Charter-in) Registration

Parallel –Out (Bareboat Charter-out) Registration

Types of Registration:

Part 1- Registration of ships in the Register of Cyprus Ships

Part 2- Tax Incentives

New Tonnage Tax System (TTS)-The Merchant Shipping (Fees and Taxing Provisions) Law of 2010 (Law 44(I)/2010)

Simplified tonnage tax system approved by the European Commission as compatible with the requirements of the EU acquis;

Cyprus is the only open EU Registry achieving the approval of such a tax system, providing a competitive advantage against other Member States; Rates applicable to ship managers are 25% of those applied for ship owners and charterers.

Part 2- Tax Incentives

The new tonnage tax system offers following tax advantages:Total exemption from income tax on:

Income from the operation of a qualifying ship engaged in a qualifying shipping activity Dividends paid directly or indirectly out of such income Interest earned on working capital Income from the sale of a qualifying ship

Part 3- Shipping Related Incentives

Competitive ship registration costs and fees; No crew/ officers nationality restrictions; Full protection for financiers and mortgagees; Signatory to all the international maritime conventions on safety, security and pollution prevention; White List of the Paris and Tokyo MOUs; Exclusion from List of Targeted Flag States of US Coast Guard; 23 Merchant Shipping Bilateral Agreements; 45 Double Tax Avoidance Treaties; Reliability and problem solving Capacity of DMS.

Part 3- Shipping Related Incentives

Reliability and problem solving Capacity of DMS

365 days per year service;

Competent officers and surveyors available 24 hours/ day;

Offices in Piraeus, Hamburg, Rotterdam, London, New York and Brussels.

The Protection of Cyprus Ships Against Acts of Piracy and other Unlawful Acts Law of 2012 (Law 77(I)/2012) was published in the Official Gazette on 15 June 2012 to enhance the security of Cyprus ships whilst at sea.

Thank you !!!