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Shipping
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ADVANTAGES OF THE CYPRUS FLAG

The most important advantages of ships under the Cyprus Flag are:

  • no income tax on the profits derived by a Cyprus Shipowning company nor any tax on any dividend of any Cyprus shipowning company (including chartering of any nature of any vessel) (S.4 of the Merchant Shipping Laws no.38 (I) of 1992
  • no tax on dividends of a Cyprus shipping company
  • no estate duty on the inheritance of shares
  • no capital gains tax on the sale or transfer of a ship or the transfer of the shares of the shipowing company
  • no tax on the salaries of crew members
  • the possibility of employing any nationality of crew member in view of the limited availability of the Cyprus crew
  • recognition of the Competence certificate issued by Cyprus
  • application of English Law
  • existence of a Collective Agreement between Trade Unions and Shipowners
  • Cyprus ships can call at any port in the world and in most enjoy favoured national treatment
  • Possibility of provisional registration taking place abroad
  • A quick and easy way of obtaining certificates for the ship
  • Minimum of red tape
  • Low tonnage tax and other duties paid for registration fees, annual tonnage tax, mortgages etc
  • No stamp duty on ship mortgage deeds
  • Full protection and recognition of mortgages registered on a Cyprus ship
  • Possibility of parallel registration of Cyprus ships in other countries
  • Possibility of parallel registration of foreign ships in Cyprus Registry
  • Existence of Bilateral agreements between Cyprus and other countries
  • Existence of high quality professional services
  • Perfect telecommunication services

The Ministry of Communication and Works impose certain restrictions regarding the registration of ships under the Cyprus flag. These restrictions may be summarised as follows:

  1. vessels of any type and tonnage not exceeding 17 years of age may be registered in the Cyprus Register of Ships
  2. vessels of any type (other than passenger ships) and tonnage between 18 and 20 years may also be registered subject to the following conditions:
    1. either the vessel passes a special inspection (assessment) as specified by the Department of Merchant Shipping and conducted by its surveyors. The inspection (assessment) may take place up to six months prior to the date of registration and there is no obligation for the vessel to undergo the same inspection at the time of provisional registration unless an incident affecting its seaworthiness has occurred.
    2. (i) the vessel is managed from Cyprus, and
      (ii) a Cyprus Collective Agreement for Seamen, or an approved agreement between the shipowner and the seamen’s unions or appropriate national authority under a Bilateral Maritime Agreement, is signed and renewed regularly.
  3. vessels (other than passenger ships) between 21 and 23 years of age may also be registered, subject to the condition (a) and (b) of section 2 above, provided that the beneficial owner has another two vessels registered under the Cyprus flag, each over 1000 GRT, with a good record, especially as regards safety, the average age of which, including the vessel to be registered, does not exceed 17 years.
  4. vessels (except passenger vessels) over 23 years of age may be registered subject to the conditions (a) and (b) of section 2 above, provided that
    1. at least 51% of the shares of which are owned by Cypriot permanently residing in Cyprus, and
    2. at least 50% of their directors, who must substantially participate in the control and management of the activities of the company are Cypriots permanently residing in Cyprus.
    3. They are managed from Cyprus, and
    4. They undergo a special inspection

    For passenger vessels over 23 years certain other conditions apply.

  5. A passenger vessel over 17 and up to and 25 years of age may be registered subject to the following conditions:
    1. it passes a special inspection which should be undergone at least annually
    2. at least 25% of its crew are Cypriot seamen with whom an agreement must be signed unless the District Labour Office in Limassol confirms that there are no unemployed seamen available. In addition at least one Cypriot student or graduate of a Marine Officers’ School if available is engaged on the vessel for a period of up to six months for sea going training
    3. a Cyprus Collective Agreement for Seamen or an approved fully agreement between the shipowner and the seamen’s unions or appropriate national authority, under the Bilateral Maritime Agreement is signed and renewed regularly.
  6. A passenger vessel over 25 and up to 28 years of age may also be registered subject to the following conditions:
    1. (a) either its beneficial owner has another two vessels registered under the Cyprus flag each over 1000 GRT with a good record especially as regards safety the average age of which including the vessel to be registered does not exceed 25 years; or
      (b) its beneficial owner is a Cypriot who in case he resides abroad manages his vessel
    2. it passes a special inspection which should be undergone at least annually
    3. it complies with provisions of 1960 SOLAR Convention
    4. at least 25% of its crew are Cypriots seamen with whom an agreement must be signed unless the District Labour Office in Limassol confirms that there are no unemployed seamen available.
    5. a Cyprus Collective agreement for seamen or an approved agreement between the shipowner and the seamen’s unions or appropriate national authority under the Bilateral Maritime Agreement is signed and renewed regularly.
  7. a passenger vessel over 28 years of age may be registered subject to the following conditions:
    1. it is owned by Cypriots permanently residing in Cyprus or by a Cypriot company:
      1. at least 51% of the shares of which is owned by Cypriots permanently residing in Cyprus, and
      2. at least 50% of its directors who must substantially participate in the control and management of the activities of the company, are Cypriots permanently residing in Cyprus.
    2. it passes a special inspection which should be undergone at least annually
    3. it is managed from Cyprus
    4. at least 25% of its crew are Cypriot seamen with whom an agreement must be signed unless the District Labour Office in Limassol confirms that there are no unemployed seamen available; and
    5. a Cyprus Collective Agreement for seamen or an approved agreement between the shipowner and the seamen’s unions or appropriate national authority under a Bilateral Maritime Agreement is signed and renewed regularly.
  8. the inspection (assessment study) will consist of:
    1. an examination of sufficient extent of the vessel’s records kept by her Classification Society
    2. a general examination of the vessel

This inspection does not apply to liquefied gas carriers or chemical tankers and to pleasure crafts.
A request for assessment is to be submitted in writing to the Department either by the owners or by the purchaser with the owners’ permission.
The onboard inspection should not take longer than one working day.
The applicant must:

  1. submit the documentation required with complete and correct information
  2. instruct the vessel’s Classification Society to make available to the Department their records relating to the vessel
  3. make appropriate arrangements and provide safe access to and from the vessel for the Surveyor of the Department of Merchant Shipping and assist him so that the survey may be carried out in accordance with the requirements of this Note
  4. advise the Department on the place and dates on which the vessel will be available for survey; the Department may give special consideration to vessels which are to sail, in ballast, to a repair port for the purpose of carrying out complete special survey and on conversion works of a major character or are to proceed to a port where they will be laid-up
  5. deposit with the Department sufficient funds to cover the Department’s fees and expenses which will arise in connection with the submitted request.