The Cyprus Shipping Company

Legal Status

The company is registered as a private company withlimited liability (limited by shares) under the provisions of the Cyprus Companies Law. The procedure for the incorporation of the Company currently takes about one week. The present legislation contains provisions, which facilitate the acceleration of the various procedures.

Tax and other benefits to Shipping Activities

• Special taxation for shipping companies: Shipowners, charterers and ship managers participating in the Cyprus tonnage tax system, are exempted from the income tax and any other tax or levy on dividends paid to shareholders, on interest earned on working capital and on any profit made from the sale of a qualifying ship.
• No income tax on the emoluments of officers and crew on board a Cyprus ship.
• No estate duty on the inheritance of shares in a shipowning company.
• No stamp duty on ship mortgage deeds or other security documents.
• VAT exemption for international transport services when the effective use and enjoyment of the services takes place outside the EU.

Tonnage tax

The new Tonnage Tax System (Law 44(I)/2010) is applicable as from the fiscal year 2010. Under this new system, qualifying owners of Cyprus ships are not liable to pay tax under
the provisions of the Income Tax Law in force, but are subject to an annual tax referred to as tonnage tax which is calculated on the basis of the net tonnage of the ships they own as prescribed in the table below.

Sample calculation of the annual tonnage tax for a 19.538 net tonnage vessel:

The main provisions of the new tonnage tax system are described below:

• Beneficiaries
The tonnage tax system is available to any owner, charterer or ship manager who owns, charters or manages a qualifying ship in a qualifying shipping activity. The tonnage tax is calculated on the net tonnage of the ship according to a broad range of bands and rates prescribed in the Merchant Shipping (Fees & Taxing Provisions) Law of 2010. The rates applicable to ship managers are 25% of those applied for shipowners and charterers.

• Qualifying ship
A qualifying ship is any seagoing vessel certified under applicable international or national rules and regulations and registered in the ship register of any member of the International Maritime Organization and the International Labour Organization, which is recognized by Cyprus. The new tonnage tax system specifically excludes certain types of ships, such as ishing vessels, ships used primarily for sports or recreation, river vessels, non-self propelled floating cranes and non-ocean going tug boats, among others.

For more information please download our brochure here