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Cyprus Ship & Yacht Registration

Shipping in Cyprus has had a remarkable and steady growth since the mid-sixties.
The progressive policies followed by the government of Cyprus, the law that regulates shipping and the services provided by local Professionals, have elevated the Cyprus flag to one of the most attractive shipping flags world-wide and hence favored by many ship owners.
The Cyprus Merchant Shipping Law 1963, 1982 and 1987 governs the law required for the Registration of Ships, Sales and Mortgages. A ship to be registered under the Cyprus flag must be owned by a Cyprus Legal Entity (Locally-based Company).

The procedure for registering a vessel under the flag of Cyprus is stated by the above Acts.
The requirements which are needed to be satisfied are the following:

The 50% of the shares in the ship must be owned:

• by Cypriots, or
• by a company registered in Cyprus , irrespective if such a company is totally owned by foreigners or not,
• or with special permission of the Council of Ministers, by a foreign corporation in which Cypriots will have a controlling interest.

Therefore it is clearly that foreigners may own solely these entities or partly with Cypriots.

The ship must be under 17 years of age, or if it is over 17 to 20 years of age provided that:

• The vessel undergoes a special inspection,
• or The vessel is managed from Cyprus

If the ship is between 20 to 23 years of age, it may be registered provided that:

• The beneficial owner has at least another two vessels registered under the Cyprus flag, each having a gross tonnage of over 1.000 tons with a good safety record, and whose average age, including the vessel to be registered, does not exceed 17 years or
• its beneficial owner is Cypriot who, in the situation he resides abroad, fully manages his vessel. The vessel undergoes a special inspection The vessel is managed from Cyprus .

If the ship is over 23 years of age, it may be registered provided:

• It is owned by Cypriots permanently residing in Cyprus or
• by a Cypriot company,
• The vessel undergoes a special inspection,
• The vessel is managed from Cyprus .

While an applicant is waiting for permanent registration, which will take place after all the administrative formalities have been completed, a provisional registration procedure is available . Such provisional registration will allow time for all the administrative formalities of permanent registration, while in the meantime the ship will be registered under the Cyprus flag. The approval of the Minister of Communications and Works is required. However registration is possible sometimes to take place in countries where Cyprus has an Embassy, High Commission, Consulate or Honorary Consul.

Provisional registration usually takes place within 10-12 days, provided all the necessary documents, information, safety confirmation certificate are submitted. Once a ship is provisionally registered, permanent registration must take place within six months . An extension of a period of 3 months is available upon an application.

Tax Incentives for Shipping Companies.

The shipping companies are totally exempted from paying any tax.

The advantages of the Shipping Companies are:

• They pay no estate duty on the inheritance
• They pay no income tax on profits or dividends
• No capital gain is considered to arise from the sale or transfer of ownership of any ship or shares in a shipping company
• Emoluments (the salary)of the captain,officers,crew (seamen) employed on board Cyprus ships are exempted from tax
• Dividends distributed to shareholders of International ship management companies are exempted from tax
• Seamen employed by Cyprus International ship management companies on board foreign flag ships or in respect of services on board Cyprus flag ships managed by them pay no tax in respect of emoluments received by them. To qualify for tax exemption in respect of foreign flag ships, the emoluments must be paid through a bank operating in Cyprus
• Foreign employees of shipping companies whose income derives from outside Cyprus are taxed at 10% of the normal tax rates applicable in Cyprus . If they receive their emoluments in Cyprus then they are totally exempt from tax.
• Foreign employees of shipping companies, who work within Cyprus , are taxed at half the rate of tax. Shipping companies and their foreign employees are entitled to maintain foreign currency bank  accounts and may transfer their income abroad after paying all necessary taxes.

  Apart from the company's certificates the underneath documents are required to accompany the application:

• A duly legalized Bill of Sale, by which the owner has acquired title to the ship
• Resolutions of the company's board sanctioning the purchase of the ship and the registration under the Cyprus Flag
• A power of an Attorney authorizing an Attorney to execute the necessary documents on behalf of the ship - owning company
• Declaration of Ownership (form M.S.53)
• Memorandum as to the Ship's Husband (form M.S.10)
• The Application for a Radio license for the ship
• Deletion Certificate from the previous registry where appropriate
• Copy of the Agreement signed with ship's International Radio Accounting Authority.

Parallel registration is also available by the Cyprus law. There are two forms  of internationally accepted bareboat registration:

• allows a foreign flag vessel on beraboat charter to be registered in 'parallel' under the Cyprus flag for a period of up to 2 years, which is renewable.
• allows a Cyprus flag ship to be bareboat chartered to a foreign person or company and registered 'parallel' in a foreign register for the duration of the charterparty.

Admiralty

The Supreme Court of Cyprus is exercising the Admiralty jurisdiction. A claimant before the Cyprus Admiralty Court has a choice of whether to proceed by way of an action 'in personam' or an action 'in rem'.

An action 'in rem' is particularly effective for the protection of claims as it can provide security by arresting a ship situated within the jurisdiction of the Cyprus Admiralty Court .

Maritime lien is also another concept common to Cyprus law which recognizes and uphold the same causes, giving to maritime liens, identical to those under English Law.

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