Shipping 2026

CYPRUS Law and Practice Contributed by: Kyriacos Scordis and Sofi Mylona, SCORDIS PAPAPETROU & Co LLC

10. Additional Maritime or Shipping Issues 10.1 Other Jurisdiction-Specific Shipping and Maritime Issues Cyprus has enacted a reform of some aspects of its tax system, with key measures effective from 1 Janu - ary 2026. The changes aim to update the tax frame - work, adjust the distribution of the tax burden, and align Cyprus’s rules with international standards. Key changes affecting businesses, including ship - ping-related entities, include the following. • Corporate income tax: the standard corporate tax rate will increase from 12.5% to 15%. This is accompanied by reductions to dividend-related taxation and associated measures (see the SDC reform below). • Special Defence Contribution (SDC) reform: the SDC on actual dividend distributions to Cyprus tax residents will be reduced from 17% to 5%, and deemed distribution rules will be abolished, enhancing tax efficiency for holding and owner- managed structures common in shipping, as well as levelling the playing field for businesses active within Cyprus. • Abolition of stamp duty: stamp duty will be com - pletely removed, lowering transactional costs for commercial and financing documents – a benefit for shipping companies engaged in frequent con - tracts and financing arrangements. • Other corporate relief: additional measures, such as extended loss carry-forward periods and sim - plified compliance obligations, are expected to improve corporate planning and cash flow man - agement. Although the tonnage tax regime remains unchanged, the broader fiscal reforms are likely to have several effects on the shipping sector, particularly in terms of transaction costs, cash flow, and overall tax efficiency.

implications involve issues of frustration of contracts, war risk insurance coverage, late or non-delivery of goods, and deterioration of goods due to late delivery. Examples of what amounts to frustration of contract under Cyprus law have been discussed previously (see 9.1 Force Majeure and Frustration ), and inter- national conflict is a typical example of when such a situation may arise (eg, due to blockades to the Suez Canal or attacks on shipping in the Red Sea). Insurance contracts are particularly affected by inter - national conflicts such as the war in Ukraine or Houthi attacks on vessels, as war risk insurance policies often contain express provisions that deal with dam - age, loss or delay caused by acts of war. As such, they may carve out the relevant risk or, at an additional cost, cover (or exclude, as the case may be) operating in war zones or high-risk areas, as well as correspond - ing risks such as: • attacks on vessels, hijacking or piracy; • damage caused by military actions (eg, air strikes, naval attacks); and • delays, loss of or damage (eg, in the case of per - ishable goods) to cargo in transit through affected regions. In addition, delays or failure to deliver goods on time due to international conflicts, such as blocked trade routes or attacks on vessels, can lead to disputes over late or non-delivery . In cases where a shipping contract specifies delivery times, any delay in deliv- ery (whether caused by conflict or other factors) may constitute a breach of contract, unless the delay is excused by force majeure or frustration and the con - tract contains relevant provisions. Irrespective of the right of a shipper or consignee to claim damages for the late delivery of goods, which could include financial losses, lost market opportuni - ties, or any inconvenience caused by the delay, under Cyprus law, the innocent party (typically the shipper/ consignee) has a duty to mitigate their losses. Thus, even if the delay is due to a conflict, the innocent party must take reasonable steps to reduce their losses.

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