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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
