Cyprus has today one of the world’s largest ship registry, is one of the largest third-party ship management centers. Shipping law is one of our main areas of practice.
Our law firm provides legal services to clients for shipping loans & mortgages, refinancing, registration of Cyprus shipping companies, registration of ships under the Cyprus flag and registration of ships under flags of other jurisdictions:
Our law firm specializes in the Mortgage of vessels and Loan Agreements, drawing up and finalizing all the necessary documents required.
Sale of vessel (Memorandum of Agreement, Addendums, Bill of Sale, etc.), Purchase of vessel, Reflagging of vessel, Deletion of vessel, Shipbuilding contracts, Crew endorsements & SISRBs, renewal of shipping certificates i.e., Radio license, CLC certificate, CSR certificate, etc.
The Cyprus Ship Registry will readily grant its permit to register a shipping company without there being a necessity to submit a Bank reference. Nominees may be used who at a later stage will transfer their shares to the beneficial owners. Once the Cyprus Shipping Company is registered, a ship can be registered in its name and under the Cyprus flag.
Procedures have to be followed and documentation be submitted for the Provisional registration of a ship under the Cyprus flag. Within 6-9 months thereafter the ship must be permanently registered with the Registrar of Ships (permanent registration).
A ship registered in a foreign registry may be registered in parallel in the Cyprus Registry (parallel registration).
New Merchant Shipping Tonnage Tax Legislation 44 (I) 2010
The new tonnage tax system for Cyprus merchant shipping was approved by the European Commission on 24th March 2010 (case N. 37/2010), as compatible with the requirements of the EU acquis, in accordance with the relevant guidelines on State Aid to Maritime Transport. The Merchant Shipping (Fees & Taxing Provisions) Law was enacted in May 2010 and introduces a new tonnage tax system in Cyprus. This simplified tonnage tax system is approved for the first time for an EU Member State with an open registry, thus available to the world Shipping business community.
Scope of Tonnage Tax: It extends the favorable benefits applicable to ship owners of Cyprus flag vessels and ship managers to owners of foreign flag vessels and charterers. It also extends the tax benefits that previously only covered profits from the operation of vessels in shipping activities, to cover profits on the sale of vessels, interest earned on funds used other than for investment purposes and dividends paid directly or indirectly from shipping related profit. The new tonnage tax system contains most of the favorable features found in tonnage tax systems in other EU countries, and more. The regime, therefore, provides Cyprus with a competitive advantage and is expected to significantly contribute to the improvement of the already strong position of the country in the shipping world.
- No tax on income / profits of a qualified Ship-owner
- No tax on income / profits of a qualified Charterer of a qualifying vessel from the use of the vessel in any qualifying maritime activity
- No tax on dividends from such profits at all levels
- No tax on sale or transfer of such vessels or the shares of the ship-owning company
- No income tax on the emoluments of officers or crew on board such vessels
- No tax on interest earned (excluding capital used for investments)
The Cyprus VAT Yacht Leasing Scheme
The VAT Yacht Leasing Scheme applies to yachts owned by a Cyprus Company which are leased to a physical or legal person and reduces the effective VAT rate for yacht registration from 19% up to 2,42%.
The VAT Yacht Leasing Scheme aims to determine the percentage of time a yacht spends within the EU based on the size & type of the yacht instead of time sailing records and apply VAT according to this percentage.
The VAT Yacht Leasing Scheme applies to both motor & sailing yachts.
The VAT Yacht Leasing Scheme implies the following:
- A Yacht Leasing Agreement between the lessor owner of the yacht which must be a Cyprus Company with VAT number and the lessee individual or company who leases the yacht from the owner for the use of the yacht, with a possible option for the lessee to buy the yacht at the end of the lease period.
- The approval of the VAT Commissioner.
- An initial contribution from the lessee being at least 40% of the yacht’s value.
- Corporate income tax on profit.
- Sailing in Cyprus waters within one month of the beginning of the lease.
- Monthly lease payments with a lease of maximum 48 months.