The Cyprus flag has had unprecedented success in the last few years, rising to a position of prominence in world shipping.
Shipping is dominant in Cyprus due to the country’s excellent geographical position, the significant number of bilateral treaties for the avoidance of double taxation concluded by Cyprus and the favourable taxation regime which has been maintained even after the accession to the European Union.
A. Ship Registration
In accordance with the relevant law in force all registry transactions and/or applications with respect to ships and ship registration must be effected by a local lawyer.
A vessel may only be registered in the Registry of Cyprus Ships if:
- More than fifty percent (50%) of the shares of the ship are owned: by Cypriot citizens or
by citizens of other Member States who in the instance of not being permanent residents of the Republic will have appointed an authorised representative in the Republic of Cyprus, or
- The total (100%) of the shares of the ship are owned by one or more corporations, which have been established and operate:
- in accordance with the laws of the Republic of Cyprus and have their registered office in the Republic, or
- in accordance with the laws of any other Member State and have their registered office, central administration or principal place of business within the European Economic Area and which will have either appointed an authorised representative in Cyprus or the management of the ship is entrusted in full to a Cypriot or a Community ship management company having its place of business in Cyprus, or
- outside Cyprus or outside any other Member State but controlled by Cypriot citizens or citizens of Member States and have either appointed an authorised representative in Cyprus or the management of the ship is entrusted in full to a Cypriot or a Community ship management company having its place of business in Cyprus. The corporation is deemed to be controlled by Cypriots or citizens of any other Member States when more than 50% of its shares are owned by Cypriots or citizens of any other Member States or when the majority of the Directors of the corporation are Cypriot citizens or citizens of any other Member State.
B. Types of Registration
A. Provisional Registration
B. Permanent Registration
C. Parallel Registration
C. Formation of a Cyprus Shipping company
The first step to be taken by all non-European ship owners who wish to register a vessel under the Cyprus flag is to form a Cyprus Shipping Company which will acquire the vessel in its name.
The company is registered as a private company with limited liability (limited by shares) under the provisions of the Cyprus Companies Law, Chapter 113, as amended.
The filing of the Memorandum and Articles of association with the Registrar of Companies has to be in Greek. The time usually required for such incorporation is about 7 days from the filing of the incorporation documents. The Memorandum of association must contain the objects of the company, set out as widely as possible. For a shipping company, the objects usually include the ownership and operation of vessels, the borrowing of money, mortgaging of the vessel, etc.
The registered office of such company is usually situated at the offices of either the lawyers who have incorporated the company in Cyprus or the accountants who act for the company, unless the company has a more substantial presence in the island and operates from fully fledged offices or has a sister management company or affiliate here. The registers and minute-books are kept with the secretary of the company.
D. The economic benefits of a Shipping company:
- No tax on profits from the operation or management of a Cyprus registered vessel or on dividends received from a vessel owning company.
- No capital gains tax on the sale or transfer of a Cyprus-registered vessel or the shares of a vessel owning company.
- No estate duty on the inheritance of shares in a ship-owning company.
- No stamp duty on ship mortgage deeds or other security documents.
- Double tax treaties with 42 countries.
- No exchange control and freedom of movement of foreign currency.
- Full protection for financiers and mortgagees.
- Low set up and operating costs for companies.
E. Other advantages when registering a vessel in Cyprus
- EU flag
- Classification of Cyprus flag in the White List of the Paris and Tokyo MOUs resulting in fewer inspections of the ships and less delays at the ports of both MOUs.
- Maritime offices in New York, London, Rotterdam, Piraeus, Brussels and Hamburg offering services to Cyprus ships.
- A network of inspectors of Cyprus ships, covering important ports worldwide.
- Signatory to all international maritime conventions on safety and pollution prevention.
- Bilateral agreements with 29 countries in the field of Merchant Shipping.
- Efficient and qualitative provision of services by the Department of Merchant Shipping.
F. Our Services
The firm provides a wide spectrum of services in this field advising owners, managers, charterers, freight forwarders and their respective insurers in respect of:
- Conducting searches on ships files kept with the Department of Merchant Shipping
- Ship registration under the Cyprus flag
- Claims for loss or damage to cargo
- Freight disputes
- Collisions and salvage claims
- Disputes under shipbuilding and repairing contracts
- Financing, security and the enforcement of mortgages
- Problems relating to the employment of officers and crew
- Personal injury claims
- Choice of flag and registration
- Aviation matters including aircraft registration and finance
Please contact a member of our staff for further information and/or clarifications.