TONNAGE TAX & INCENTIVES

Qualifying owners of Cyprus and foreign ships, charterers and ship managers who are approved to be taxed under the Tonnage Tax System (the “TTS”) are subject to an annual tax referred to as tonnage tax, which is calculated on the basis of the net tonnage of the qualifying ships they own, charter or manage.

The TTS is available to any owner, charterer or ship manager who owns, charters or manages a qualifying ship engaged in a qualifying shipping activity.



1. Owners of Cyprus Ships

Eligible for the TTS is an owner of a Cyprus ship, who owns a qualifying ship, which is engaged in a qualifying shipping activity.



2. Owners of Foreign Ships

Eligible for the TTS is an owner of a foreign ship, who is a tax resident of the Republic of Cyprus, has opted to be taxed under the TTS and owns a qualifying ship, which is engaged in a qualifying shipping activity.

Owners of foreign ships must comply with the “community-flagged share” requirement.



3. Charterers

Eligible for the TTS is a charterer who charters ships under bareboat, demise, time or voyage charter and is a tax resident of the Republic of Cyprus, has opted to be taxed under the TTS and charters a qualifying ship, which is engaged in a qualifying shipping activity. The charterer must comply with the below requirements:

  • minimal share of the fleet in ownership; and
  • “community-flagged share” requirement.

4. Ship Manager

Eligible for the TTS is a ship manager who is a tax resident of the Republic of Cyprus, has opted to be taxed under the TTS, provides ship management services (crew and/or technical) to qualifying ships and meets at any time the below requirements:

  • maintain a fully fledged office in Cyprus;
  • employ a sufficient in number and qualifications personnel;
  • at least 51% of its employees are EU/EEA citizens;
  • “community - flagged share” Requirement;
  • economic link of managed ships with the Community;
  • provision of crew management services in accordance with the Maritime Labour Convention requirements for crew managers; and
  • ship managers must be certified under the ISM Code.
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