Cyprus is a leading forum in the international maritime industry mostly due to its attractive tax system for ship owners and ship managers and due to its ratification of major international maritime conventions. Cyprus is currently the largest third party ship management centre in the EU.
Maritime authority in Cyprus
The competent authority in Cyprus for maritime activities is the Department of Merchant Shipping within the Ministry of Communications and Works (the DMS) which operates under the umbrella of the Ministry of Communications and Works. The maritime activities included under the authority of the DMS are the registration of ships, administration and enforcement of merchant shipping legislation, control of shipping enforcement of international conventions, investigation of marine casualties, resolving labour disputes on board of Cypriot ships, training and certification of seafarers and registration of mortgages of ships carrying the Cyprus flag.
Registration in the Register of Cyprus Ships
A ship registered in the Register of Cyprus Ships will carry the Cyprus flag.
A vessel may only be registered in the Register of Cyprus Ships if:
1. More than 50 per cent of the shares of the ship are owned by a Cypriot citizen or by citizens of another European Union member country who have appointed representatives in Cyprus in the event they are not Cyprus permanent residents; or
2. 100 per cent of the shares of the ship are owned by one or more companies which have been established and operate:
(a) in accordance with the laws of Cyprus and have their registered office in Cyprus; or
(b) in accordance with the laws of any other European Union member country and have their registered
office, central administration or principal place of business within the European Economic Area and which will have either appointed an authorised representative in Cyprus or the ship is managed by a Cypriot or a Community ship management company having its place of business in Cyprus; or
(c) outside Cyprus or outside any other European Union member country but controlled by Cypriot citizens or citizens of European Union member country and have either appointed an authorised representative in Cyprus or the management of the ship is entrusted in full to a Cypriot company or a company of the European Union having a place of business in Cyprus.
Types of registration
Vessels of any size and type may be registered in the Cyprus Register of Ships or the special register of parallel registration provided they comply with certain requirements contained in Law 45/1963 governing the registration, transfer and mortgages of vessels (the Law). A vessel may be provisionally registered under the Cyprus flag or permanently registered under the Cyprus flag. Under the Law, it is possible for a foreign flagged vessel to be registered in parallel in the Cyprus ship register under the Cyprus flag (‘Parallel In’ registration) and it is possible for a Cyprus flagged ship either provisionally or permanently registered to be registered in a foreign register (‘Parallel Out’ registration) subject to the laws of the foreign country permitting parallel registration.
A key factor affecting registration under the Cyprus flag is the age of the vessel. This is calculated by deducting the year in which its keel was laid from the year in which the application for registration was filed with the
Registrar of Cyprus Ships
Cargo vessels of 500 gross tonnes and over and tug boats
Any type of cargo vessels of 500 gross tonnes or more and aged between 15 and 20 years may be registered subject to a satisfactory entry inspection.
Vessels above 20 years of age but not more than 25 years of age may be registered subject to a satisfactory entry inspection. It is also required to be under the management of, for ISM Code compliance purposes, a ship management company whose principal place of business is in the EU and which is certified as compliant with the
ISM Code
Vessels above 25 years of age can only be registered in special cases pursuant to the criteria of DMS.
The above rules are also applicable to tug boats with engine power equal or greater than 1500KW, or with an appropriate certificate of bollard pull of 20 tons or more.
Cargo vessels of less than 500 gross tonnes
Such vessels which do not exceed 20 years of age can be registered without any other conditions. If they are over 20 years of age but not more than 25, they may be registered subject to a satisfactory entry inspection. If they are above 25 years of age, they can only be registered in special cases pursuant to the criteria of DMS.
Passenger vessels
Passenger vessels of up to 30 years of age may be registered subject to a satisfactory entry inspection and subsequent annual inspections.
If the passenger vessel is over 30 years of age but not exceeding 40, it may only be registered if
(a) it is operated by a ship-management company having its principal place of business in the EU which is well staffed with qualified personnel and which is certified as compliant with the ISM Code;
(b) undergoes a satisfactory entry inspection as well as annual inspections thereafter;
(c) undergoes an additional inspection with satisfactory results over the hull, machinery and general conditions of the vessel; and
(d) at least two EU citizen cadets who are registered with the District Labour Office of the DMS are engaged in sea training for a period of up to six months in any one year.
Passenger vessels above 40 years of age can only be registered in special cases pursuant to the criteria of DMS.
Fishing vessels
Fishing vessels over 25 years of age cannot be registered with the Register of Cyprus Ships.
Fishing vessels which are not more than 25 years of age can be registered subject to satisfactory entry inspection and provided that they hold a fishing licence issued by the Department of Fisheries and Marine Research upon its satisfaction that the relevant requirements have been satisfied.
Special requirements apply to fishing vessels of 24 metres in length and over.
Coastal passenger vessels, small passenger vessels and landing craft
Engine propelled vessels up to 25 years of age, sailing vessels, landing craft may be registered provided they are operated by a ship-management company having its principal place of business in the EU which is well staffed with qualified personnel and which is certified as compliant with the ISM Code.
Pleasure craft
Yachts or other types of vessels which do not exceed 25 years of age and are exclusively used for recreation and not for any commercial operations may be registered without any other conditions. If their age is above 25 years of age, then they may be registered subject to a satisfactory entry inspection.
Special requirements apply to pleasure craft over 24 metres in length.
Ships engaged in activities not previously mentioned and non self-propelled vessels
Offshore supply vessels, floating cranes, dredgers, barges, launches, support craft, research ships, certain tugboats and mobile offshore drilling units can be registered without any further conditions if they are up to 25 years of age. If they are over 25 years of age registration is subject to a satisfactory entry inspection, and where required by law, must be operated by a ship-management company having its principal place of business in the EU which is certified as compliant with the ISM Code.
Conclusion
The favourable tax system for ship owners and ship managers, the level of expertise of all parties involved in the shipping industry, the low set up and operating costs as well as the fact that Cyprus is an EU and EEA member have made Cyprus the tenth largest merchant fleet in the world, the third largest merchant fleet in the EU, the second largest ship-management centre in the world and the largest third party ship-management centre in the EU.
SOURCE: GOLD NEWS
