SHIPPING COMPANIES AND YACHTS
There are significant advantages association with the registration and operation of a shipping company in Cyprus. Though the conclusion of double tax treaties and signing of numerous bilateral and international agreements, the island’s own well-established maritime infrastructure and the government’s dedicated efforts to the development of the shipping industry Cyprus has experienced a phenomenal growth in this sector. Today with a fleet flying the Cyprus flag at over 25 million tons and with a large number of ship management companies having the island, Cyprus is ranked amongst the largest maritime centers in the world.
Some of the most important tax and other incentive available to shipping companies are as follows:
- – Shipping companies registered in Cyprus which owns or charters ships under the Cyprus flag and operate in international waters are completely exempt from income tax on the profits from any shipping activity.
- – No capital gains tax is payable on the sale or transfer of a ship or shares in a shipping company.
- – No estate duty is payable on the inheritance of shares in a shipping company.
- – No income tax is payable on the earnings of officers and crew of Cyprus ships operating in international waters.
- – No stamp duty is payable on bills of sale and mortgages on ships and related documents.
- – IBCs, engaged in other shipping activities (e.g. ship management) are taxed the same way as other IBCs and additionally ship management companies are taxed at the rate of 4.25% unless the company elects to pay tonnage tax on the ships it manages.
- – The fees for the registration of a ship are substantially lower than in other countries and the annual tonnage tax is very competitive when compared to other countries. Fees and taxes payable are based on the type of registration (i.e. provisional or permanent), gross tonnage and age of ships. The Cyprus legislation permits the practice of parallel (bareboat) registration.
- – Ship owning companies are not required to submit annual audited financial statements. Other shipping companies are however required to do so.
- – The Cyprus legislation allows the provisional registration of a ship which affords time to the applicant to prepare to apply for permanent registration.
Benefits similar to those enjoyed by ship owning companies may be also available to persons wishing to register a yacht under the Cyprus flag. This may be possible if the yacht is acquired by a Cyprus physical or legal entry. For foreign persons this may by possible by establishing a “yacht owning company’’ and transferring the yacht to this company by signing a bill of sale.