Cyprus taxation on the shipping industry and on Cyprus shipping enterprises
The Cyprus tax system for merchant shipping was approved by the European Commission on 24th March 2010 and has been renewed for another 10 years from 1 January 2020 and provides that profits from qualifying shipping operations, from the provision of qualifying crew or technical ship management services, dividends paid directly or indirectly out of such profits and interest earned on funds used as working capital or for the payment of expenses relating to the management of ships are covered by tonnage tax.
1. Cyprus Tonnage Tax
Cyprus Tonnage tax is calculated on the net tonnage of the ship and on the basis of a broad range of bands and rates prescribed in the legislation.
Specifically, the Cyprus tonnage tax is calculated based on the following tax rates:
2. Table of Cyprus tonnage tax rates
| Net Tonnage | ||||
| 0-1.000 | 1.001-10.000 | 10.001-25.000 | 25.001-40.000 | > 40.000 |
| € 36,50 tax | € 31.03 tax | € 20.08 tax | € 12.78 tax | € 7.30 tax |
| per 100 Units Τonnage | per 100 Units Τonnage | per 100 Units Τonnage | per 100 Units Τonnage | per 100 Units Τonnage |
Note: Tax rates applicable to ship managers are 25% of the above.
3. Ship Owners of Cyprus flagships
Shipowners of Cyprus flag ships automatically fall within the scope of tonnage tax. Shipowners of EU community flagships and foreign flagships may opt to be taxed under Cyprus tonnage tax (certain circumstances must apply for foreign flagships).
Any ship owner opting for the Cyprus tonnage tax must remain in the system for 10 years at least.
4. Ship Charterers
Α Charterer who charters a ship under bareboat, demise, time or voyage charter is eligible to opt for the Cyprus tonnage tax system subject to conditions
5. Ship Managers
A ship manager providing crew and/or technical ship management services is eligible for the Cyprus tonnage tax system under certain circumstances provided the criteria are satisfied.
6. Tax exemption for crew members (sailors) of Community ships
The Cyprus tonnage tax system excludes from Cyprus taxation the incomes of eligible crew members of both Cyprus and Community vessels.
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