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Cyprus is the third largest island in the Mediterranean after Sicily and Sardinia and combines a low tax regime together with an extensive network of double tax treaties.

From a shipping perspective the fiscal and economic advantages encompass competitive ship registration charges and annual tonnage taxes. Cyprus is also a major ship management centre with circa 60 ship management companies operating locally. The Cyprus registry ranks tenth in the world with a gross tonnage exceeding 21 million.

Other advantages for ship owners and operators include:

  • Low corporate tax rate - 10% on profits
  • No exchange controls
  • Double tax treaties with 45 countries
  • Bilateral agreements of cooperation in merchant shipping with 23 countries
  • Low set up and operating costs for companies
  • VAT exemption for international transport services when the effective use and enjoyment of the services takes place outside the EU
  • Special taxation for shipping companies, Ship owners, charterers and ship managers participating in the Cyprus tonnage tax system
  • No estate duty on the inheritance of shares in a ship owning company
  • No income tax on the emoluments of crew
  • No stamp duty on ship mortgage deeds or other security documents
  • A legal system based on the English model

Approved Classification Societies

The following is a list of the classification societies recognized by the Department of Merchant Shipping:

American Bureau of Shipping Bureau Veritas
China Classification Society Class NK
Det Norske Veritas Germanischer Lloyd
Korean Register Of Shipping Lloyd's Register of Shipping
RINA Russian Maritime Register of Shipping
Polish Register of Shipping

Yacht & Ship Registration

A vessel may only be registered in the Register of Cyprus Ships if more than 50% of the shares of the ship are owned by a Cypriot citizen or by citizens of other EU member states who have appointed an authorised local representative in Cyprus, or where 100% of the shares of the ship are owned by a Cypriot company.

The main types of vessel registration in Cyprus are Provisional, Permanent and Parallel registration.

In order to enable the Registrar of Cyprus Ships to initiate the procedure for the provisional registration of a ship, the following information is required:

  • Name of the vessel and flag of registry at the time of the application
  • Name of the applicant registering the vessel
  • Name under which the vessel will be registered
  • Fully particulars of the vessel (type, year of build, gross and net tonnage)
  • Name of the classification society
  • Declaration of particulars of the company for the ISM Code
  • The operating/trading area of the vessel
  • Vessel location at the time of her provisional registration
  • Name and address of the shareholders and directors of the vessel owning company

For permanent registration the following supplementary documents must be submitted to the Registrar of Cyprus Ships in addition to the documents required for the provisional registration:

  • Certificate of Survey and Tonnage Certificate
  • Ship's Carving and Marking Note
  • The International Certificates from a recognised Classification Society
  • Safety Management Certificate
  • Confirmation of the Customs Department on the payment of VAT for pleasure craft

Yacht Leasing Structure

The Cypriot VAT Department has issued guidelines on the treatment of yachts leased by a Cyprus company. Under this yacht leasing structure, the effective VAT rate can be reduced to as low as 3.4% of the initial value of a yacht. Furthermore, the lease can run over a maximum 4 year period thus allowing a lower lease repayment when compared to Malta which operates over a maximum of 3 years.

Under the VAT guidelines, it is assumed that larger yachts are likely to spend less time within EU waters than smaller yachts and this principle has been extended to yacht leasing within Cyprus as illustrated by the tables below.

Motor Boats

Yachts Length % of use in EU waters Effective VAT rate
Over 24 meters 20% 3.4%
Between 14,01 and 24 meters 30% 5.1%
Between 8,01 and 14 meters 50% 8.5%
Up to 8 meters 60% 10.2%
Yachts operating within protected waters 100% 17%

Sailing Boats

Yachts Length % of use in EU waters Effective VAT rate
Over 24 meters 20% 5.1%
Between 20,01 and 24 meters 50% 8.5%
Between 10,01 and 20 meters 50% 8.5%
Up to 10 meters 60% 10.2%

In order to meet the qualifying criteria of the scheme, there are several conditions that need to be met:

  • The lease agreement must be concluded between a Cyprus company and a 3rd party lessee which may be an individual or company irrespective of their origin or domicile.
  • The Lessee must make an initial payment of no less than 40% of the vessel's value.
  • The lease payments must be paid on a monthly basis and must not exceed 4 years
  • The Lessor is expected to make a profit of at least 10%
  • The Yacht must sail to Cyprus within 1 month of the commencement date of the lease

Who to Contact

If you are interested in more information regarding the registration of your yacht in Cyprus, please contact our OCRA Marine Team

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