2020 Cyprus Country Report

Maritime & Shipping
Sector Profile
state to constantly upgrade the maritime administration
and to build up its competitive offering.
Plans are now underway for the two associations
to merge into one in a bid to create a more united
front. The creation of a new and independent
Shipping Deputy Ministry in 2018 made the
sector even more efficient, autonomous and business
focused. The timing of the launch allowed
Cyprus to capitalise on new opportunities for the
sector from a developing natural gas sector and
Brexit. These factors coupled with the country’s
competitive tax incentives, has led to the relocation
of a number of shipping companies to
Limassol, the country’s maritime capital.
Limassol has undergone a major transformation
in recent years. Bustling cafes and restaurants
fill its revamped historic old town while its long
coastal road is now flanked by cycle paths, pedestrian
walkways and prestigious, high-rise residential
developments. Foreign shipmanagement
executives enjoy the renowned holiday country’s
pleasant lifestyle and its safe and family-friendly
environment. An added bonus for shipping executives
comes from recent legislation providing
tax incentives for high-earning expats.
COMPETITIVE TONNAGE TAX
A major driver of the shipping sector’s success
was put in place in 2010 when, after more than
10 years of negotiations with Brussels, Cyprus
secured an agreement for an upgraded and competitive
EU-approved tonnage tax (TT) system.
In 2020, this agreement was reapproved by the
EU, and also unanimously approved by the
House plenum, ensuring the stability of the tax
framework until 2030 and maintaining Cyprus’
prominent position in the shipping arena both
on a European and international level.
The main benefit of the TT regime is the certainty
it provides companies on their annual tax
obligations, enabling them to do their business
planning accordingly. While other jurisdictions
might have less expensive TT regimes, Cyprus’
incorporates all three types of maritime activities
– ship owning, shipmanagement and chartering,
making it unique in the EU where other
jurisdictions might specialise in just one or two
of these areas. The Cyprus flag is also considered
one of the highest quality EU flags available today
and ranks at the top of various Port State Control
Agreement ‘White Lists’.
COMPETITIVENESS AND EFFICIENCY
The creation of an independent Shipping Deputy
Ministry, whose head reports directly to the
country’s President, was a major milestone for
the industry’s development, serving to further
attract quality shipping companies and tonnage
to Cyprus. Based in Limassol, the Shipping
Ministry is the first ministry outside the capital
city of Nicosia and as such is ideally located to
work with the CSC and the CUS. The expertise
and proactive approach of maritime specialists in
both the private and public sector have long been
the driving force of the local maritime cluster,
which has supported the development of Cyprus
into the world-class maritime centre it is today.
The SDM created a roadmap to ensure Cyprus
maintains its competitive edge. Its mission is to
consolidate Cyprus’ position as a world-class
maritime centre, and to protect the stable and
business-friendly framework provided to foreign
investors in shipping by further expanding the
country’s registry and maritime cluster, improving
maritime safety and environmental protection,
implementing a blueprint for blue development
and upgrading available services.
Key to hitting these targets is to reduce bureaucracy
and human error and to launch a
single service centre for shipping companies. In
addition, Cyprus has plans to expand its presence
in leading ports around the world and is looking
5%
of the world’s fleet
and around 20% of
global third-party
shipmanagement
activities are controlled
from Cyprus.
Cyprus employs around
60,000
seafarers from around
the world and
9,000
personnel onshore
118 Country Report CYPRUS 2020