The sea and seafaring have been, from antiquity, a source of commercial opportunity and a part of Cyprus life. In this guide, you will find all the information needed for yacht registration in Cyprus.
The Cyprus Flag
The Cyprus flag carries many benefits:
- Cyprus is a European Union (EU) flag state and classified in the white list of the Paris and Tokyo MOUs (white-listed, high-quality flag).
- Cyprus is a signatory to all the international maritime conventions that guarantee navigation standards and quality. Also, it belongs to several bilateral agreements whereby Cyprus yachts are given national or favored nation treatment at ports.
- Paperwork and documentation are done in the English language.
- According to statistics from the Shipping Deputy Ministry(dms.gov.cy), the Cyprus Register has the 3rd largest fleet in the EU and the 11th worldwide.
- Limassol, at the heart of Cyprus maritime life, is the largest third-party management center in the EU.
- Cyprus yacht tax is low. Also, there are tax incentives for registering a yacht in Cyprus, see below.
Note that the so-called Turkish republic of northern Cyprus is not a recognized state and has no status in the international community. Therefore no yacht can be legally registered under its flag.
Costs, VAT, and yacht tax benefits
Registration costs and fees are low. For example, a 300 EUR fee per annum is paid to the Shipping Deputy Ministry.
The Republic of Cyprus has one of the most attractive VATs on yachts systems in the EU. Under the VAT scheme for yachts, the VAT rate can be as low as 3.4% of the yacht’s value (8.5% highest).
Other yacht tax benefits include:
- A low tonnage tax, payable by all vessels;
- No tax on the operational or management profits on qualifying Cyprus-registered ships;
- No tax on the income of a qualifying owner received from the operation of a qualifying ship;
- No tax on dividends from profits from the operation, management, or sale of a commercial yacht.
Note that a commercial yacht is a qualifying ship; a private yacht is not.
The relevant legislation for ship registration in Cyprus is:
- Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws 1963-2005;
- Merchant Shipping (Masters and Seamen) Laws 1963-2002;
- Merchant Shipping (Fees and Taxing Provisions) Law of 2010-2020.
Basics of yacht registration in Cyprus
The same rules apply to yachts, ships, and other vessels.
Cyprus has three types of registration: provisional, permanent and parallel.
- Provisional registration: is for 6 months, renewable one time for 3 months. It can happen at the Registry, or in any of the consular posts of Cyprus, with the help of consular officers.
- Permanent registration: this is the most common type of registration. If the vessel was previously registered in a foreign registry, a certificate of deletion from that previous registry would be required.
- Parallel registration: two categories; parallel-in and parallel-out.
- Parallel-in registration is where foreign vessels belonging to a Cyprus shipping company under a bareboat charter are granted the Cyprus flag for 2 years (renewable). Such a foreign-registered ship is registered in the Special Book of Parallel Registration.
- Parallel-out registration is when owners of Cyprus vessels bareboat charter the vessel to a foreign company or person for parallel registration in a foreign register for the length of the charterparty.
Note: A charterparty is a contract to lease a ship. A bareboatcharter is when the owner leases the vessel to the charterer for a fixed period; the charterer is responsible for the crew, fuel, insurance, and maintenance.
Applications to register and necessary documents
Where: Registrar of Cyprus Ships (Shipping Deputy Ministry).
The list of necessary documents is long and includes:
- Application for registration,
- Declaration of Owner,
- a Builder’s Certificate,
- a Bill of Sale.
Other documents depending on the case.
The complete list (20+ documents as of 31.05.2022) at: https://www.dms.gov.cy/
Who can own a yacht to register in Cyprus?
Citizens of Cyprus or a company established in Cyprus; or,
Citizens of the EU/ European Economic Area (EEA) or a company registered within those and have appointed an authorized representative in Cyprus or have given the management of the yacht to a Cyprus ship management company; or,
Corporations registered outside the EU/ EEA but controlled by EU citizens and appoint an authorized representative in Cyprus.
- More than 50%of the shares in the yacht are owned by a Cypriot citizen, an EU or EEA citizen; or
- Total amount of shares are owned by one or more companies that are established under the laws of Cyprus; or
- Total amount of shares owned by an EU Member State or an EEA Member State company or companies which have appointed an authorized representative in Cyprus or have entrusted the management of the ship to a Cyprus shipping company; or
- Total amount of shares owned by a company or companies established outside the EU/ EEA but are owned by Cypriot/EU/EEA citizens and which have appointed an authorized representative in Cyprus or have entrusted the management of the ship to a Cyprus shipping company.
Consult and appoint an authorized representative in Cyprus to determine the application requirements. The authorized representative can be:
- a Cypriot citizen;
- Citizen of other Member State resident in Cyprus;
- Partnership/ corporation established per Cyprus legislation. For this reason, it is common for persons wishing to register a vessel in Cyprus to incorporate a company in Cyprus first (dms.gov.cy).
Pay fees and taxes (registration costs).
Submit documentation for approval.
Grounds for rejection
- Ship banned on Port State Control Grounds;
- Ship detained on at least 3 occasions during 2 years before the application on Port State Control groups/ US Coast Guard/ States of Memoranda of Understanding.
- Ship used and constructed exclusively for inland navigation (internal waters, canals, dams etc.).
Source: Cyprus Government Policy on the Registration of Ships, Annex 1, dms.gov.cy.
Yacht Classification Societies or Class Societies
For some types of registration, you need a confirmation from a classification society.
A classification society ensures that a vessel follows certain construction, design, and technology requirements.
The confirmation certificate does not guarantee seaworthiness or safety, only that the yacht complies with society’s rules. However, the certificate increases the price of a vessel and lowers the insurance premium.
Societies are independent bodies with no commercial interests.
Ten of the most famous of these societies, including Lloyd’s Register and Registro Italiano Navale (RINA), American Bureau of Shipping, Bureau Veritas, and Nippon Kaiji Kyokai are represented by IACS (International Association of Classification Societies) based in London. The IACS (iacs.org.uk) was the original yacht classification society.
Others include the Chinese Classification Society (CCS) and the Russian Maritime Register of Shipping (RS).
Under Cyprus law, only lawyers registered with the Cyprus Bar Association can draft the documents necessary to carry out the registry transactions for ships and vessels.
Our team of professional lawyers provides a variety of legal services and is able to help you with all the relevant requirements, giving expert advice on every aspect of yacht and ship registration in Cyprus.