Cyprus has always been targeted by many nations for its beneficial geographical position and, amongst other elements, its attractive shipping operations. Ever since 1963, when the government first offered incentives encouraging ship ownership and registration, Cyprus has become a thriving international business and shipping centre for shipping companies. Throughout the years, Cyprus has been developed to offer, not only classic shipping services but also ship management due to its advantageous geographical position and the professional people who engage in this demanding profession. Additionally, the island attracted some of the most popular shipping companies, which now have their headquarters here. The country is one of the top five ship management centres worldwide, having around 60 ship management companies in operation while employing almost 40,000 seafarers. This accounts for the one-fifth of the world’s third-party ship management market. Additionally, the Cyprus Registry ranks 10th amongst international fleets, for having 1,857 ocean-going vessels with an aggregate gross tonnage of more than 21 million tons.
It took some time for the people to appreciate the opportunities the legislation of 1963 offered and invest in the shipping industry in Cyprus, as in the early years, only a small number of ships were registered. What triggered the expansion of the Cyprus Shipping Registry, both in terms of the number of vessels registered and gross tonnage, was the double tax treaties signed and the numerous bilateral agreements in conjunction with the tax benefits introduced both for foreign and local shipowners.
Here are some of the most well-known shipping companies in Cyprus
- Marlow Navigation
- Interorient Shipmanagement
- Columbia Shipmanagement
- Amathus Aegeas
- G.A.P Vassilopoulos Group
- A. Phellas Management (Shipping) Ltd
- Andreas Orthodoxou Ltd
- Bernhard Schulte Shipmanagement
- Cargoline Logistics
- Christoudias Logistics
- Chrysanthou Maritime
- Five Continents Logistics
The Cyprus shipping companies offer versatile services and are dedicated to customer satisfaction for shipowners by providing them with customized, comprehensive and high-quality advice for their own shipping businesses. They seek to employ competent and highly qualified crew to handle any job on the ships, such as providing lubricating oils, storage, consumables and maintaining the vessels according to the owners’ specific requirements. Additionally, the crew dries the dock of the vessel, fulfils the requirements of the oil majors and keeps the necessary records to ensure that the vessel has all its necessary certificates and manuals required by traders.
Some of the various services shipping companies in Cyprus offer include:
- Shipping activities, such as any commercial activity that constituted maritime transport, crew management and/or technical management of ships.
- Towage, dredging and cable laying (eligible for tonnage tax)
- Registration of ships and small vessels
- Leasing of yachts (motor and sailing boats)
- Ship agency or husbandry services
- Liner services
- Ship to ship transfers
- Chartering services
- Custom or warehousing
- Technical management
- Changing the vessel ownership
- STS Operation
According to the law, maritime transport definition includes:
- Traditional carriage of goods and passengers,
- Ancillary services, such as hotel, catering, entertainment,
- Retailing activities onboard a qualifying vessel,
- Loading and unloading of cargo, the operation of ticketing facilities and passenger terminals.
Setting Up a Shipping Company in Cyprus
A shipping company can be incorporated in the same way as any other company in Cyprus. The relevant legislation includes the Cyprus Companies Law, Cap. 113, which governs the procedures of creating a Cypriot company. Additionally, the Merchant Shipping (Registration of Ships, Sales and Mortgages) Law 1963 to 2005 (Law No 45 of 1963, as amended) provides all the necessary steps for registering a ship in the country, and it is based on the English Merchant Shipping Acts 1894-1954.
Most commonly, a Cyprus shipping company is registered as a limited liability private company in accordance with the provisions of Cap.113; however, it can also be registered as a limited liability public company. You can learn more details about setting up a company by reading the article “Cyprus Company Formation”.
Furthermore, Cyprus has ratified all the major international conventions on maritime safety and security, prevention of pollution of the seas, training, certification and watchkeeping of seafarers and limitation of shipowners’ civil liability and conventions on maritime labour. It is also a party to the Convention on the High Seas 1958 and the United Nations Convention on the Law of the Sea 1982.
Benefits of registering shipping companies in Cyprus
Cyprus is the ideal choice for ship owners, charterers and ship managers due to significant tax benefits, the legal infrastructure and its well-known reputation. The shipping industry is one of the few industries which remained untouched by international taxation initiatives:
Benefits for Ship Owning Companies
- No tax on income for shipping activity by an owner of a Cyprus ship.
- No tax or withholding tax on dividends from profits arising out of the operation of a Cyprus ship
- No capital gains tax on the sale of the ship or shares of the ship owning company
- The legislation allows non-EU/EEA vessels to enter the Tonnage Tax regime (TT) if the fleet is composed of 60& or more EU/EEA vessels
- No estate duty on inheritance of shares of the ship owning company
- No stamp duty on ship mortgage deeds or security documents, whilst affording full protection to mortgagees
- Competitive ship registration costs and annual tonnage taxes
When registering a ship in Cyprus it automatically obtains the EU flag, which means freedom of movement of foreign currencies and no exchange control.
Benefits for Ship Charterers
- Tax rates equivalent to 25% of the tonnage tax rates or 4.25% corporate tax, if the composition requirement is met (60% EU/EEA vessels)
- Tonnage Tax is reduced by 10% if all the vessels of the charterers carry EU/EEA flags or are managed by EU/EEA
- No tax on profits from the use of qualifying vessels
- No tax on dividends paid out at all levels
- No tax on interest income from qualifying activities
Benefits for Ship Management Companies
- Tax rates equivalent to 25% of the tonnage tax rates or 4.25% corporate tax
- No withholding tax on dividends paid by ship management companies
- Crew earnings are exempt from Cyprus income tax or social security contributions
Unique benefits of Cyprus shipping
- EU Approved Tonnage Tax system, which guarantees cooperation with all EU countries
- Very low Tonnage Tax, which complements the lowest corporate tax in the EU: 12.5%
- Competitive ship registration fees
- Recognition of Competence Certificate from many countries
- Beneficial owners’ protection through nominee or trustee shareholders
- The Cyprus flag, which is on the Paris and the Tokyo Memoranda of Understanding White List, it enjoys the respect of Port State Control Authorities, Classification Societies and Insurers worldwide
- Parallel-in and Parallel-out registration allowed
- Access to the EU Directives
- No thin capitalization rules
- No CFC legislation
Cyprus plays a prominent role in the shipping industry worldwide and will continue to strengthen its position therein by maintaining and enhancing its sound maritime infrastructure, the favourable tax regime, rates and its competitive ship registration. Thus, if you are a shipowner, a shipping manager or owner of a shipping company then make the wise decision to bring your shipping activities to Cyprus.