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Cyprus Tax – Cyprus Shipping Enterprises

 

CYPRUS  SHIPPING ENTERPRISES

The new Cyprus tax system for merchant shipping was approved by the European Commission on 24th March 2010 and provides that profits from shipping operations, from the provision of 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.

Tonnage Tax

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 tax is calculated based on the following tax rates:

Net Tonnage (ΝΤ)

0-1.000

1.001-10.000

10.001-25.000

25.001-40.000

> 40.000

€ 36,50 per 100 ΝΤ

€ 31.03 per 100 ΝΤ

€ 20.08 per 100 ΝΤ

€ 12.78 per 100 ΝΤ

€ 7.30 per 100 ΝΤ

Note: Tax rates applicable to ship managers’ are 25% of the above.

Ship Owners:

Ship owners of Cyprus flag ships automatically fall within the scope of tonnage tax. Ship owners of EU community flag ships and foreign flag ships may opt to be taxed under tonnage tax (certain circumstances must apply for foreign flag ships).

Any ship owner opting for the tonnage tax must remain in the system for 10 years at least.

Charterers:

Α Charterer  who charters a ship under bareboat, demise, time or voyage charter is eligible to opt for the tonnage tax system provided that the tonnage of the ships under time or voyage do not exceed 75% of the total tonnage of the ships chartered and owned, for more that three tax periods.  The percentage increases to 90% if the ships chartered are EU/EEA ships or their crew and technical management are carried out from the EU/EEA. Charterers of non EU flag ships must comply with further requirements.

Ship Managers:

A ship manager providing crew and / or technical ship management services is eligible for the tonnage tax system under certain circumstances provided the criteria are satisfied.

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Last update: April 2017

The authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF Cyprus firms are member firms of the PKF International Limited network of legally independent firms and do not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

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