SHIPPING TAXATION – CYPRUS
Sail Under Europe’s Most Attractive Shipping Regime
Cyprus offers a globally recognized Tonnage Tax System (TTS) approved by the European Commission, giving shipowners, charterers, and ship managers one of the most competitive maritime tax frameworks in the world.
At a Glance
| Category | Regime Type | Tax Basis | Key Benefit |
|---|---|---|---|
| Shipowners | Tonnage Tax System | Based on vessel net tonnage | Exemption from corporate tax |
| Charterers | Tonnage Tax System | Based on chartered tonnage | Predictable fixed tax cost |
| Ship Managers | Optional under TTS | Tonnage or profit basis | Reduced effective tax rate |
| Other Shipping Income | Normal Corporation Tax | 12.5% | Applies only if outside TTS |
Cyprus remains the only EU country with an approved Tonnage Tax regime covering the entire shipping sector.
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We help shipowners, charterers, and managers structure efficiently under Cyprus’s maritime tax regime.
1. Overview
The Cyprus Shipping Taxation System is built around the Tonnage Tax System (TTS), introduced under the Merchant Shipping (Fees and Taxing Provisions) Law of 2010, and approved by the European Commission.
It replaces normal corporate taxation with a fixed tax based on a vessel’s net tonnage, ensuring stability and transparency for maritime operators.
This regime applies to:
- Shipowners of Cyprus-registered vessels;
- Shipowners of foreign vessels managed and controlled from Cyprus;
- Charterers (bareboat, demise, time, or voyage charterers);
- Ship managers providing technical or crew management from Cyprus.
2. Tonnage Tax System (TTS) Explained
Under the TTS, qualifying entities do not pay corporate income tax on profits from shipping operations. Instead, they pay a flat tonnage tax determined by the net tonnage of the fleet.
| Net Tonnage (NT) | Tax 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 |
| Over 40,000 | 7.30 |
Key Points
- The tax is payable annually.
- No further income tax, defence tax, or capital gains tax applies on shipping profits.
- The system ensures predictable and low effective taxation.
3. Qualifying Conditions
Shipowners
- Must own qualifying vessels engaged in maritime transport of goods or passengers.
- For foreign vessels, management and control must be exercised from Cyprus.
Charterers
- Must charter qualifying vessels and maintain management from Cyprus.
- Non-qualifying charters taxed under normal corporate regime.
Ship Managers
- May opt into the TTS by applying to the Deputy Ministry of Shipping.
- Must employ a minimum number of qualified personnel in Cyprus.
- 25% of crew management and 75% of technical management activities must be carried out from Cyprus.
4. Income Exempt from Corporate Tax
Under the TTS, the following are fully exempt from income tax:
- Profits from operation of qualifying ships in shipping activities.
- Dividends paid directly or indirectly out of such profits.
- Profits from sale of qualifying ships.
- Interest on working capital or ship financing.
- Salaries and benefits of officers and crew employed on qualifying ships.
5. Ancillary and Related Activities
The TTS also covers certain ancillary activities, including:
- Towage, dredging, and cable-laying (if meeting maritime conditions).
- Management of ship operations from Cyprus.
- Chartering of vessels on time or voyage basis.
- Income from charter commissions and ship management.
Activities not qualifying under TTS remain subject to 12.5% corporate income tax.
6. Duration and EU Approval
- The Tonnage Tax System was originally approved by the EU in 2010, renewed in 2020, and extended through December 2030.
- It is fully compliant with EU State Aid Guidelines for maritime transport.
- Cyprus’s renewal approval underscores its commitment to maritime competitiveness and regulatory stability.
7. Social Insurance and Crew Taxation
- Non-resident seafarers serving on Cyprus-registered vessels are exempt from personal income tax on employment income.
- Crew contributions under the Social Insurance Scheme may be reduced or exempt, depending on residency and treaty status.
8. Administrative Obligations
- Annual Tonnage Tax Return submitted to the Deputy Ministry of Shipping.
- Payment typically due by 31 March each year.
- Shipowners and managers must maintain full accounting and tonnage records in Cyprus.
- Non-compliance or late submission may result in surcharges or disqualification from TTS.
9. Advantages of the Cyprus Shipping Regime
- No corporate income tax for qualifying shipping activities.
- Exemption from capital gains, dividend, and defence taxes.
- Predictable and low tonnage-based taxation.
- EU-approved and OECD-compliant structure.
- Strategic location, strong maritime legal framework, and English-speaking professionals.
- Access to EU flag, international treaties, and comprehensive ship management ecosystem.
10. Why Clients Choose Our Firm
- Structuring and registration of Cyprus shipping entities under TTS
- Legal, fiscal, and regulatory coordination with the Deputy Ministry of Shipping
- Crew and ship management compliance services
- Optimization of ship financing and tonnage planning
- Integration of shipping and holding structures for global investors
We ensure your fleet sails smoothly through Cyprus’s regulatory waters — maximizing exemptions, minimizing risk, and maintaining full compliance.