Tonnage Tax System and Ship Registration in Cyprus

On 16th of December 2019, the EU Commission has approved the prolongation of Cyprus’ tonnage tax System for the next 10 years, up to 31 December 2029. This approach will encourage new ship registrations in Cyprus. 

There are three different categories of registrations: 

Provisional Registration: This type of registration is intended for cases when a vessel is not a Cyprus ship previously and decided to register temporarily. This is frequent choice of the majority of ship-owners to be temporarily registered at first time, since this gives them a period of 9 months to complete all administration work in order to prepare for a permanent registration. 

The following fees and taxes are payable at the time of the provisional registration of a vessel: 

  • registration fees; 
  • tonnage tax for 6 months; 
  • fees for obtaining a license to install and operate a wireless telegraphy and/or telephony station; 
  • fee for the issue of the provisional certificate of Cyprus Registry. 

These should be paid not later than the date on which the provisional registration of the vessel will be applied. 

The extension of the period of the provisional registration of a vessel under the Cyprus flag for a maximum period of 3 months, requires the following fees and taxes to be paid: 

  • one half of the registration fees; 
  • tonnage tax for 3 months. 

These should be paid prior to the expiry date of the period of provisional registration. 

Permanent Registration: Permanent registration follows the completion of 9 months of provisional registration. The Register of Cyprus Ships will publish a “Certificate of Cyprus Registry”. It is not necessary requirement for the ship to be in a Cyprus port. 

If the relevant registration fees have been paid at the time of the provisional registration of the vessel and the period of provisional registration has not expired, then no other fees and taxes are levied for the permanent registration of a vessel apart from: 

  • fee for the issue of the certificate of Cyprus Registry; 
  • payment of any other statutory fees and taxes due or in arrears at the time of the permanent registration of the vessel. 

No other fee is payable if the permanent registration takes place before the expiry of the provisional registration period. 

Otherwise the fees payable on provisional registration are payable a new. 

The following fees and taxes are payable each year: 

  • tonnage tax; 
  • fees for the renewal of the license to install and operate a wireless telegraphy and/or telephony station 

Parallel Registration 

Parallel registration has two forms: 

Parallel-In Registration: A foreign flag vessel on a bareboat charter to a Cyprus Shipping Company to be listed under the Cyprus flag for a period typically around 2 years. This period can be prolonged. 

The initial registration fees for the parallel registration of a foreign vessel under the Cyprus flag (parallel-in registration) are 20 percent higher than those applicable to the provisional or permanent registration of the vessel.  

If the foreign vessel under the Cyprus flag is deleted and thereafter re-registered and the chartering is effected to the benefit of the same charterer prior to the deletion, the re-registration fees are reduced by 50 percent. There is no increase in the tonnage tax or other dues payable and the vessel is subject to the same financial obligations as other Cyprus ships. 

Parallel-Out Registration: A Cyprus ship can be bareboat chartered to a foreign individual or corporation and register parallel in a foreign register for the duration of the charter party 

A Cyprus ship registered in parallel in a foreign register (parallel-out registration) has the same financial obligations as all other Cyprus ships, except of the fees for the issue or renewal of the radio license.  

If the vessel is deleted from the Cyprus Registry prior to the termination of her status of parallel-out registration, that part of the tonnage tax which is proportional to the period from her deletion until the termination of her status of parallel registration is reimbursed upon application. 

The financial obligations of vessels (Cypriot and foreign) registered in parallel are payable in advance for the entire period of the parallel (bareboat) registration. 

According to the new law the below vessels are eligible to be taxed under the Cyprus’ TTS and it is worth mentioning that the list of the ‘qualifying vessels’ is in line with the Maritime Guidelines and Commission’s case practice. 

  • Vessels operating maritime transport activities, such as cargo and passenger ships; 
  • Cable-laying ships, pipe-laying ships; 
  • Ocean-going dredgers, ocean-going tug boats; 
  • Crane vessels, self-propelled barges; 
  • Research vessels; 
  • Mobile offshore drilling units (MODUS); 
  • Off-shore support/servicing vessels engaged in petroleum and gas activities; 
  • Multi-purpose break-bulk and other types of support/ servicing vessels; 
  • Cruise ships; commercial yachts; 
  • Rescue and marine assistance vessels; 
  • Guard vessels for maritime security and environmental clean-up purposes; 
  • Vessels for raising, repairing and dismantling windmills; 
  • Ice management vessels; 
  • Accommodation vessels for housing offshore workers at sea; and 
  • Any vessel engaged in the transportation of any UN/EU humanitarian aid or is involved in any UN or EU humanitarian relief operations. 

The above-mentioned list of eligible vessels may be extended following the prior notification approval by the European Commission. 

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