Yacht Registration under the Cyprus Flag
Main reasons to register a vessel under Cyprus Flag
There are several things to consider who deciding on a country / flag to register your yacht.
- Low registration cost
- No tax on profits from the operation
- No income tax on the wages of crew
- Favourable tonnage tax scheme
- No stamp duty on ship mortgage
- Maritime offices around the world
- Mortgage protection for lenders
- EU flag
- Classification of Cyprus flag in the White List of the Paris and Tokyo MOUs and exclusion from the “List of Targeted Flag States” of the US Coast Guard resulting in fewer inspections of the ships and less delays at the ports of both MOUs and of the US.
- Maritime offices in New York, London, Rotterdam, Piraeus, Brussels and Hamburg offering services to Cyprus ships.
- A network of local inspectors of Cyprus ships, covering important ports worldwide in order to ensure efficient and effective control of Cypriot vessels and to avoid detentions by port state control.
- Signatory to all international maritime conventions on safety and pollution prevention.
- Bilateral agreements with 26 countries, through which Cypriot ships receive either national or favoured nation treatment in the ports of other countries. Those agreements with labour supplying countries provide for specific terms of employment which are beneficial to both the shipowners and the seafarers.
- Efficient and qualitative provision of services by the Department of Merchant Shipping
Conditions of Ownership:
A vessel may only be registered in the Register of Cyprus Ships if:
A) More than fifty percent (50%) of the shares of the ship are owned:
- by Cypriot citizens or
- by citizens of other Member States1 who in the instance of not being permanent residents of the Republic will have appointed an authorised representative in the Republic of Cyprus, or
B) 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 shipmanagement 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 fifty percent 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.
Mortgages on Vessels:
Once a ship has been registered under the Cyprus flag, a mortgage can be created thereby securing a loan or other financial obligations on conditions agreed to by the parties, without the need for exchange control permission. The creation of a mortgage under Cypriot laws is not allowed on vessels registered parallel-in in the Register of Cyprus Ships.
Age limit of Vessels:
Vessels of any size and type may be registered in the Cyprus Register of Ships or the Special Book of Parallel Registration as long as they comply with the provisions contained in the merchant shipping legislation and the circulars of the Department of Merchant Shipping (DMS) and satisfy certain conditions according to their age and type
Recognised Classification Societies:
It should be noted that the vessel must be classed with one of the classification societies that the Cypriot Government recognises. These are ABS, BV, CCS, DNV GL, KR, LR, NK, PRS, RINA AND RS.
TYPES OF REGISTRATION:
Provisional registration of a ship may remain in force for six months. Thereafter, it may be renewed once, for a further three months.
Permanent registration. The permanent registration of a provisionally registered vessel must be effected within 6 months (or 9 months if the 3 month extension has been obtained) from the date on which she was provisionally registered.
Parallel (Bareboat) Registration: The Cyprus legislation provides for the two forms or bareboat registration internationally accepted e.g. the “Parallel-in” registration and the “Parallel-out” registration of vessels, provided certain prerequisites are fulfilled.
The Parallel-in registration offers the possibility to a foreign flag vessel on bareboat charter to a Cyprus Shipping company to be registered in parallel under the Cyprus flag for a period, usually of 2 years. The Parallel-out registration offers the possibility to owners of Cyprus ships to bareboat charter them to a foreign person or company and to effect a “Parallel” registration in a foreign register for the duration of the charter part.