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The tonnage tax system - Cyprus

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The tonnage tax system - Cyprus

The Cyprus Tonnage Tax System has been applicable since 2010. It is governed by the Merchant Shipping (Fees and Taxing Provisions) Law of 2010 (Law 44(I)/2010).Qualifying owners of Cyprus and foreign ships, charterers and ship managers who have opted and are accepted to be taxed under the TTS are subject to tonnage tax, which is calculated on the basis of the net tonnage of the qualifying ships they own, charter or manage.


Eligibility

Eligible for the tonnage tax system are:

  1. Owners of qualifying Cyprus ships, which are engaged in qualifying shipping activities, and
  2. Owners of qualifying foreign ships, which are engaged in qualifying shipping activities. Owners of foreign ships have to be tax residents of the Republic of Cyprus and must have opted to be taxed under the Tonnage Tax System.
  3. Charterers, who charter ships under bareboat, demise, time or voyage charter. Charterers have to be tax residents of the Republic of Cyprus and must have opted to be taxed under the Tonnage Tax System.
  4. Ship managers who provide ship management services in accordance with the MLC 2006 requirements for crew managers, maintain a fully-fledged office in Cyprus, employ sufficient personnel (both in quantity and qualitatively), meet the community-flagged share requirement, and are certified by the ISM Code (DOC) by the competent authority of the flag States of the ships under their technical management. Ship managers have to be tax residents of the Republic of Cyprus and must have opted to be taxed under the Tonnage Tax System.

Qualifying ships

Qualifying ships are any seagoing vessels which:

  • are certified under the applicable international or national rules and regulations
  • are registered in the ship register of any member of the International Maritime Organisation and the International Labour Organisation.

Certain vessels are specifically excluded from the Tonnage Tax System. These include:

  • Fishing and fish factory vessels
  • Vessels used primarily for sport or recreation
  • Inland waterway navigation vessels
  • Harbour, estuary and river ferries and tug boats
  • Fixed offshore installations (not used for maritime transport)
  • Non self-propelled floating cranes
  • Non-ocean going tug boats
  • Floating hotels, restaurants, casinos

Tonnage tax rates for qualifying owners and charterers of Cyprus and foreign ships

Net tonnage

Charge per 100 NT

0 - 1,000

€36.50

1,001 - 10,000

€31.03

10,001 - 25,000

€20.08

25,001 - 40,000

€12.78

> 40,000

€7.30