CYPRUS Trends and Developments Contributed by: Adam Montanios and Nicolas Montanios, Montanios & Montanios
The Shipping Deputy Ministry has implemented its national strategy towards a green and digital future, titled “Sea Change 2030”. This strategy introduces a new philosophy to the way Cyprus approaches ship - ping, and consists of a programme of 35 sustainable actions with a strict timeframe for their implementa - tion. Its primary objectives include: • bolstering the resilience of Cyprus’s shipping sec - tor in times of crisis; • enhancing its competitiveness; and • positioning it as a prominent player in the global maritime arena. This programme is widely recognised by the local shipping cluster as quite realistic in its implementa - tion – evidenced by the fact that, at the time of writ - ing, most of the proposed actions have already been implemented. Prolongation of the Tonnage Tax System The Cyprus Tonnage Tax System (TTS) was originally approved by the European Commission in 2010 for an initial ten-year period, as compatible with the require - ments of the EU acquis and in line with the guidelines on state aid to maritime transport. Prior to the expiry of this initial period, the Shipping Deputy Ministry – in co-operation with other govern - ment departments and the private shipping industry – achieved a smooth and successful prolongation of the Cyprus TTS for another ten years (up to December 2029). According to the scheme, it is possible for the follow - ing to be taxed (under certain conditions particular to each category) under the TTS and to therefore be subject to an annual tax (referred to as tonnage tax) in lieu of income or corporate tax. • qualifying owners of Cyprus-flagged vessels; • qualifying owners of foreign-flagged ships;
The following physical or legal persons are eligible for the Cyprus TTS. • An owner of a Cyprus-flagged ship who owns a qualifying ship engaged in a qualifying shipping activity (and who automatically falls within the TTS’s scope). • An owner of a foreign ship who owns a qualifying ship engaged in a qualifying shipping activity, and who: (a) is a tax resident of Cyprus; (b) has opted to be taxed under the TTS; and (c) complies with the “community-flagged share” requirement. • A charterer who charters a qualifying ship engaged in a qualifying shipping activity under bareboat, demise, time or voyage charter, and who: (a) is a tax resident of Cyprus; (b) has opted to be taxed under the TTS; and (c) complies with the “minimal share of the fleet in ownership – percentage of chartered-in ships” and the “community-flagged share” require - ments. • A ship manager who provides ship management services (crewing and/or technical) to a qualifying ship, and who: (a) is a tax resident of Cyprus; (b) has opted to be taxed under the TTS; (c) maintains a fully fledged office in Cyprus em - ploying sufficient (in number and qualifications) personnel, at least 51% of whom are EU/EEA citizens; and (d) complies with/satisfies the “community- flagged share” requirement as well as a number of additional requirements. Abolition of Vessel Registration Fees and Mortgage Fees/Simplification and Streamlining of Fees The Shipping Deputy Ministry has abolished govern - ment fees for the registration of a vessel under the Cyprus flag, as well as fees for the registration at the Register of Cyprus Ships of a mortgage as an encum - brance on a Cyprus-flagged vessel. In another attempt to simplify matters relating to the services provided by the Shipping Deputy Ministry, all fees and dues relating to ocean-going commercial
• charterers; and • ship managers.
This is calculated based on the net tonnage of the qualifying ships that such persons (physical or legal) own, charter or manage.
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