Cyprus: Ship management companies in Cyprus: An option worth considering

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Cyprus: Ship management companies in Cyprus: An option worth considering

sarantopoulou.jpg

Maria Sarantopoulou

It is no accident that Cyprus is a well-known and respected ship management centre. The reasons for Cyprus's success are the numerous competitive advantages and opportunities of the Cypriot merchant shipping legislation and, in particular, the even more advantageous tax regime. These, coupled with a strategic geographic location, have been instrumental in the remarkable growth of the Cyprus Shipping Registry.

Advantages and opportunities include:

  • Favourable tonnage tax system based on net tonnage or 12.5% corporation tax;

  • No taxation on profits from the technical and/or crew management of a qualifying vessel (Cyprus/EU/EEA) or on dividends or on interest income;

  • Split of ship management activities (crewing and technical);

  • Extensive double tax treaties network;

  • EU flag benefit, Cyprus flag whitelisted; and

  • Open registry, low ship registration cost, permanent and provisional registration.

Any foreign ship management company can take advantage of the Cypriot shipping regime by migrating to Cyprus. The procedure is very straightforward and this can be achieved by either establishing a new company or by transferring its seat to Cyprus.

Of much interest are the favourable annual tonnage tax (TT) rates calculated on the net tonnage (NT) of the vessels, which, for qualifying ship managers, are as follows:

NT

TT

0-1,000

€36.50 per 400 NT

1,001-10,000

€31.03 per 400 NT

10,001-25,000

€20.08 per 400 NT

25,001-40,000

€12.78 per 400 NT

>40,000

€7.30 per 400 NT

Moreover, to fall under the provisions of the aforementioned TT regime, the Cyprus ship management company must be:

  • A qualifying ship manager...

    which is a tax resident providing ship management services to a qualifying ship or ships of any nationality (flag) and satisfies certain preset requirements, such as:

    • maintaining a fully-fledged office in Cyprus and employ staff sufficient in number and qualification;

    • at least 51% of total number of the onshore persons employed must be EU/EEA citizens;

    • at least two-thirds of the total tonnage under management must be managed within the EU/EEA; and

    • 60% of the fleet consisting of two or more vessels is composed of EU/EEA vessels.

  • …owning or managing a 'qualifying vessel'…

    which is a vessel certified in accordance with the applicable international or national rules and regulations, and registered in the ship registry of any member of the International Maritime Organisation (IMO) or International Labour Organisation (ILO).

  • …in a 'qualifying shipping activity'

    which is any crew or technical management activity of a qualifying ship.

The opportunities are endless and certain vessels may still qualify for the TT regime even if the abovementioned requirements are not met but, as with any tax structuring, each case must be examined on its own merits. Maria Sarantopoulou (maria.sarantopoulou@eurofast.eu)

Eurofast Cyprus Office

Tel: +357 22 699 222

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

Corporate counsel should combine deep technical knowledge with strategic dynamism, says Agarwal, winner of ITR’s EMEA In-house Indirect Tax Leader of the Year award
Luxembourg’s reform agenda continues at pace in 2025, with targeted measures for start-ups and alternative investment funds
Veteran Elizabeth Arrendale will lead the new advisory practice, which will support clients with M&A tax structuring, post-deal integration, and more
MAP cases keep increasing, and cases closed aren’t keeping pace with the number started, the OECD’s Sriram Govind also told an ITR summit
Nobody likes paperwork or paying money, but the assertion that legal accreditation doesn’t offer value to firms and clients alike is false
Ryan hopes the buyout will help it expand into Asia and the Middle East; in other news, three German finance ministers have called for a suspension of pillar two
SKAT, which was represented by Pinsent Masons, had accused Sanjay Shah and other defendants of fraudulent dividend tax refund claims
TP managers must be able to explain technical issues in simple terms, ITR’s European Transfer Pricing Forum heard
Prudential had challenged HMRC over VAT group relief; in other news, Donald Trump unveiled timber and wood tariffs, and the European Commission published a ViDA implementation strategy
Australia’s CbCR rules have ‘widespread support’ and do not put American companies at a competitive disadvantage, the FACT Coalition said
Gift this article