Cyprus has always been targeted by many nations for its beneficial geographical position and, amongst other elements, its attractive shipping operations. 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.
Types of Registration for Cyprus ships
There are three types of registration for Cyprus ships, and one must decide which of them meets their specific needs.
- The ‘Provisional’ registration of Cyprus ships applies to ship registrations which last for 6 months. If necessary, the registration can be renewed once for a further 3 months.
- Secondly, there is the ‘Permanent’ registration which is most commonly used. The permanent registration of a provisionally registered ship in Cyprus must take effect within 6 months, or within 9 months in case the 3 months extension is applied, from the date of the initial registration.
- Lastly, there is the ‘Parallel’ or ‘Bareboat’ registration of ships in Cyprus, which is distinguished in two subcategories:
(a) the Parallel-in registration offers the possibility to a foreign vessel on bareboat charter to a Cyprus Shipping company to be registered in parallel under the Cyprus flag for a period of usually 2 years; and
(b) the Parallel-out registration offers the possibility to owners of Cyprus vessels to bareboat charter them to a foreign person or company and to realize a parallel registration in a foreign register for the duration of the charter party.
Requirements and Procedures for Ship Registration in Cyprus
The legal bodies which govern all matters regarding the registration of ships in Cyprus and the related transactions in the Register of Cyprus Ships or in the Special Book of Parallel Registration include the Merchant Shipping (Registration of Ships, Sales and Mortgages) Law of 1963 and the provisions of the Government Policy on the Registration of Ships under the Cyprus flag.
All the applications for registering a ship in Cyprus and the related transactions are referred to the Registrar of Cyprus Ships (the Registrar), stationed at the Head Office of the Shipping Deputy Ministry in Limassol. The first step you need to take when registering a ship in Cyprus is to consult a Cyprus lawyer, as according to the Advocates Law of Cyprus, only practicing advocates – Cyprus Lawyers are entitled to draft the necessary documents for the incorporation of companies and carry out the relevant transactions. In case the owner of the vessel is non-Cypriot, then the appointment of an Authorized Representative is necessary.
The appointed lawyer must draft and submit the required documents, which include
- the Declaration of Ownership,
- the Company Memorandum,
- Articles of Association and
- Corporate certificates in case the owner is a company, or an identification document if the owner is a physical person,
- and Bill of Sales or Builder’s Certificate.
Depending on each individual case, there might be a need to submit additional forms, such as ISPS, ISM, Registration Form of a Mobile Maritime Radio Station or a copy of Shore Based Maintenance Agreement, Registration of SAR Particulars or Confirmation of Classification Society. The documents in question must be drawn up in one of the official languages of the Republic of Cyprus, or a language which is comprehensible to the competent officers of the Shipping Deputy Ministry; documents are usually written in English.
Prior to the registration of a vessel or other related transactions in the Register of Cyprus Ships or in the Special Book of Parallel Registration, it is required by the legislation to complete the payment of the prescribed fees and taxes. The provisional registration of vessels and any related transactions may take place abroad by consular officers of the Republic of Cyprus, who are stationed at any one of the Diplomatic of Consular Missions of the Republic of Cyprus, upon instructions issued by the Registrar.
Generally, vessels of any size and type may be registered in the Cyprus Register of Ships or the Special Book of Parallel Registration, as long as they comply with the provisions of the legislation of the Department of Merchant Shipping (DMS) and satisfy the particular conditions according to their age and type. In case of fishing vessels, the applicant must submit an official communication from the Director of the Department of Fisheries and Marine Research of the Ministry of Agriculture, Rural Development and Environment, informing the Registrar that the registration of the fishing vessel in question is allowed.
Additional requirements for the registration of ships in Cyprus are imposed by the government policy, to ensure the safety, security and efficiency of shipping on clean oceans, while also safeguarding the interests of the Cyprus ships and of their owners, bare-boat charters, managers and operator.
Specifically, the Registrar will not accept an application for registering a ship which:
- At the time of the application, is banned on Port State Control grounds by a Member State of any one of the Memoranda of Understanding, from entering the ports;
- Has been detained on Port State Control grounds on three or more occasions during the 2 years before the application of registration by the States of Memoranda of Understanding or by the US Coast Guard; and
- Has been constructed for exclusive use on inland navigation or which is to be used exclusively on inland navigation (e.g. in internal waters, rivers, inland waterways, canals, natural or artificial lakes, water reservoirs or dams)
Vessels can be registered in the Register of Cyprus in the following two circumstances:
- When more than 50% of the shares of the vessel are owned either by a Cypriot citizen or citizens of the other Member States of the European Union or European Economic Area. In the latter case, the owner must appoint an Authorized Representative in Cyprus if the permanent residence is not there.
- When the total of the shares is owned by one or more corporations established and operating either
a. in accordance with the laws of Cyprus and have their registered office in Cyprus;
or b. in accordance with the laws of another EU or EEA Member State, having their registered office, central administration or principal place of business in such country and will have appointed an Authorized Representative to ensure that the management of the vessel is entrusted in full to a Cypriot citizen or a community ship management of company;
or c. outside Cyprus or a Member State, but controlled by a Cypriot citizen or a citizen of a Member State and have appointed an Authorized Representative in Cyprus for the ship management.
For the purposes of the conditions mentioned above, a person can be appointed as an Authorized Representative if their permanent residence or their established business is in Cyprus. Additionally, a corporation is controlled by Cypriots or citizens of a Member State country when they own more than 50% of the vessel’s shares, or when the majority of the Directors of the corporation are Cypriot citizens or citizens of another Member State. It is common practice for those interested in registering a ship to incorporate a company in Cyprus, which will either acquire the ships in its name or bareboat charter the ship.
Fees for Cyprus Ship Registration
In making a provisional registration of a ship in Cyprus, one is required to pay between €213.58 and €5,125.80, depending on the gross tonnage of the vessel.
The rate per tonne is 50% higher for passengers’ vessels, the minimum being €427.15.
No additional fee is payable in case of a permanent registration, as long as the registration takes place before the provisional registration expires.
When registering a ship in Cyprus it automatically obtains the EU flag, which means freedom of movement of foreign currencies and no exchange control.
Advantages of registering a ship under Cyprus Flag
People wishing to register a ship in Cyprus can enjoy a number of benefits, comparing to registering ships elsewhere in the world.:
- Cyprus applies the extremely beneficial, EU-approved tonnage tax regime. This means that the tax is charged on the basis of the tonnage and the age of the vessel, rather than on the income.
- The wages of officers and the crew are exempt from income tax – there are discounts on taxes when the crew and technical management of the ship are carried out by a ship management company registered in Cyprus or elsewhere in the EU.
- The registration, establishment and operation costs are low and no capital gains tax on the sale or transfer of a Cyprus-registered vessel or the shared of a vessel-owning company.
- The well-established legal infrastructure provides full protection for mortgagees and finance providers. There is also no stamp duty on ship mortgage deed or other security documents.
- When registering a ship in Cyprus it automatically obtains the EU flag, which means freedom of movement of foreign currencies and no exchange control.
- Since the Cyprus flag is on the ‘white list’ of both the Paris and the Tokyo Memoranda of Understanding and is not on the US Coast Guard’s List of Targeted Flag States, there are fewer inspections and delays in the procedures of ship registration and related transactions.
- The Department of Merchant Shipping provides responsive and high-quality service, supplemented by maritime offices in New York, London, Rotterdam, Piraeus, Brussels and Hamburg. There is also a network of local inspectors of Cyprus ships covering important ports worldwide.
- Cyprus is a signatory to all international maritime conventions on safety and pollution prevention. It has also concluded bilateral agreements with more than 20 countries, giving Cyprus-flag ships and their crews and cargoes national or favoured-nation treatment.
The procedures of Cyprus Ship Registration are quite straightforward, although you are always advised to consult our Cyprus lawyers with expert knowledge and experience on the matter. The vast number of benefits the Cypriot system offers regarding ship registration, management and operation denoted that it is always a good idea to bring your shipping activities on the island.