Shipping

Shipping in Cyprus started to evolve hundreds of years ago, with the island gaining a lot of expert knowledge in sailing and trading by its many different conquerors such as Egyptians, Greeks, Romans, French, Venetians and British.

After its independence in 1960, Cyprus was established as a strategic and significant international business center, due to the considerable increase of commerce, trade, offshore activities and rapid expansion of the economy. Key factors that also contributed to the island’s success are: its ideal geographic location, which is at the crossroads of three continents, Europe, Asia and Africa, the reopening of the Suez Canal, the importance of the Arab oil in the global economy and the prosperous Middle Eastern financial region.

In 1963, Cyprus realized the political, economic and social importance of shipping and begun to extend and diversify all possible avenues of shipping activity, build-up and perfect the shipping sector, attract shipping entrepreneurs, finally turning the island into the fully-fledged shipping center we see today, home to some of the world’s leading names of the global shipping industry and renowned for its high quality services and standards of safety.

The country’s excellent shipping infrastructure, was developed over the years by the Maritime Administration (the Ministry of Communications and Works, the Department of Merchant Shipping and the Ports Authority), the government body for shipping in Cyprus, and the Cyprus Shipping Industry, which is represented by the Cyprus Shipping Chamber.

Cyprus has been a member of the International Maritime Organisation (IMO) since 1978 and a member of IMO’s Council since 1987. Consequently, Cyprus is an active participant in the International Maritime Organization, the International Labour Organization (ILO) and the European Maritime Safety Agency (EMSA).

Cyprus Registry Facts:

  • 1st third party Ship Management Centre in the European Union.
  • 2nd largest Ship Management Centre in the world.
  • 10th largest merchant among international fleets the 3rd largest fleet in the European Union – accounting for approximately 25% of EU’s fleet.
  • Over 140 ship owning, ship management and shipping related companies controlling a merchant fleet of 2,200 vessels, with 50 million Gross Tonnage.
  • Continuously upgrading its services in order to offer a high standard of support to international shipping and a reputation of a “Flag of Progress”.

The Tonnage Tax System

For the first time for an EU Member State, with an Open Registry, the new and simplified “Tonnage Tax System” for Cyprus merchant shipping was approved by the European Commission on 24th March 2010, as per the requirements of the EU guidelines on State Aid to Maritime Transport. The fully revised and upgraded tonnage tax system, covers the three basic shipping activities in International Shipping: Ship owning, Ship management (including Crew Management) and the Chartering of vessels.

As of 2010 with the introduction of the new Tonnage Tax Regime, Cyprus has most certainly gained a competitive advantage and is well on its way of becoming the “Shipping Capital” of Europe.

Based on the Tonnage Tax Regime, owners of Cyprus and foreign ships, charterers and ship managers are subject to an annual tax referred to as tonnage tax which is calculated on the basis of the net tonnage of the qualifying ships they own, charter or manage.

Cyprus Tonnage Tax System benefits include:

  • No taxation of shipping activities, other than Tonnage Tax (TT)
  • No taxation of shipping profits and profits from the disposal of ships
  • No tax on dividends paid from shipping profits
  • No estate duty or capital gains tax
  • No income tax for crew members on Cyprus-flagged ships
  • Wide range of qualifying activities and wide range of qualifying vessels
  • No stamp duties on documents or mortgage deeds

The Department of Merchant Shipping (DMS)

The Department of Merchant Shipping (DMS) existed since 1963 with its headquarters situated in Famagusta, but after the Turkish invasion in 1974, the coastal town of Limassol replaced Famagusta as the port of registration of Cyprus ships. DMS was established and started functioning as a distinct entity in the Ministry of Transport, Communications and Works, in 1977.

The establishment of the DMS initiated a whole new chapter for the Cyprus Shipping sector and the department set out to establish a safe, sound and well-rounded infrastructure which would successfully facilitate not just ship registrations but also ship-management and other shipping related activities on the island. The Cyprus Registry has shown tremendous growth in the last twenty years currently ranking among the top ten on the list of leading maritime nations.

The Department’s activities include: registration of ships, administration and enforcement of the merchant shipping legislation, control of ships and enforcement of international conventions, investigation of marine casualties, resolving labor disputes on board Cyprus ships, and training and certification of seafarers.

The Cyprus Shipping Chamber

The Cyprus Shipping Chamber (CSC), established in January 1989, is the trade association of the Shipping Industry in Cyprus and currently comprises all the major ship-owning, ship-management, chartering and shipping related companies based in Cyprus. The Chamber’s member-companies collectively employ approximately 4,500 persons ashore and more than 55,000 seafarers from all over the world on-board their vessels.

The CSC’s purpose is to promote the interests of Cyprus Shipping and further the reputation of the Cyprus flag, whilst promoting and safeguarding of the legitimate interests of its professional member-companies both nationally and internationally.

CSC has evolved to become a very influential body, and major policy decisions concerning shipping matters are only taken after consulting the Chamber. One of its primary objectives is to help the Government adapt new laws, policies and procedures to the needs of the Cyprus fleet and the resident Shipping Industry in order to remain highly competitive, meanwhile raising quality, improving safety and sustaining an environment-conscious point of view.

Why Cyprus as an International Maritime Centre?

  • EU flag and European Union member state
  • Strategic location at the crossroads of three continents
  • Liberal Foreign Direct Investment Regime allowing up to 100% foreign participation in most sectors of the economy
  • EU approved favorable tonnage tax scheme
  • An abundance of tax incentives
  • Bilateral Agreements of Cooperation in Merchant Shipping with 23 countries
  • Low company set up and operating costs
  • High safety standards – in the White List of Paris MOU and Tokyo MOU
  • One of only two “Open Registries” in the EU
  • High quality services by the Department of Merchant Shipping
  • Efficient and highly professional legal, accounting and banking services
  • Advanced telecommunications network and easy access by air and sea
  • Ideal climate and high quality of life