Maritime Law in Cyprus

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Maritime law is also known as Admiralty or Shipping law and it is defined as the body of law which deals with offences related to maritime activities or matters that are maritime in character such as marine commerce, navigation, transportation of goods and passengers by sea, shipping sailors and the relationship between those who operate vessels on the oceans.

 

It shall be noted the Maritime law does not deal with the jurisdiction over costal waters, mineral rights etc. The law covering the above is the Law of Sea and this should not be confused with Admiralty law.

Maritime law in Cyprus has been shaped to a large extent through international law including multilateral treaties.

 

Cyprus, known for its favorable geographical position, as a crossroad between three continents, has become a significant shipping and trade center. Nonetheless, Cyprus has always been involved in issues concerning sea, sailing, shipping and maritime law in general.

 

Following the declaration of independence of Cyprus in 1960, numerous aspects indicated a future growth in the economic activities of Cyprus as much and as long as states in the international arena would do business with the new independent State.

 

As a result, lawmakers in Cyprus issued new international or specialized legislation that would govern all the shipping activities – and generally anything that concerns the shipping sector – was introduced into the Cypriot legal system. First and foremost:

 

  • Legislation regarding the procedure for the registration of ships which is divided into permanent registration, provisional registration and parallel registration: Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws, 1963-1996 and Merchant Shipping (Fees and Taxing Provisions) Laws, 1992-1995

 

  • Legislation regarding the registration of mortgages on ships, their types and their legal effect along with their enforcement

 

  • Legislation regarding the taxation of shipping activities: Merchant Shipping (Fees and Taxing Provisions) Laws, 1992 – 1995

 

  • Legislation relating the reduction of the tonnage tax

 

Furthermore, Cyprus entered a number of international maritime conventions dealing with pollution like the International Convention for the Prevention of Pollution from Ships, the International Convention for the Safety of Life at Sea etc. Cyprus is also a signatory to the International Maritime Labor Conventions which mainly deal with the crew of the ships.

 

Cyprus has also entered into bilateral agreements with 29 countries which govern their close cooperation in mercantile shipping. The bilateral agreements also enable tax to be efficiently regulated.

 

Current Cypriot Maritime Law is comprised of several legal frameworks defining maritime activities, navigation and transportation of goods or passengers by the sea. The Cypriot maritime law is based on the international legislation on shipping and vessel registration. The laws governing maritime activities in Cyprus are:

 

  • the Merchant Shipping Law of 2010’
  • the Law of the Sea,
  • the Marine Pollution legislation,
  • the Recreational Marine Activities legislation.

 

The most recent legislative addition, as per Circular No 08/2017 issued by the Department of Merchant Shipping (DMS), on the 28th of April 2017, the Director of the MDS informed the relevant parties of the enactment of the Merchant Shipping (Marine Equipment) Law of 2017 (Law 23(I)/2017) (the “Law”) which transposes the Directive 2014/90/EU of the European Parliament of the Council of 23rd July 2014 on marine equipment into national legislation, repealing Council Directive 96/98/EC.

Main purpose of the Directive and the Law is the enhancement for the safety at sea and the prevention of marine pollution through the uniform application of the relevant international instruments which relate to marine equipment to be placed on board EU ships, and to ensure the free movement of such equipment within the Union.

 

The new Circular also makes reference to the issuance of the Merchant Shipping (Marine Equipment) Order of 2017, P.I. 135/2017 which defines the relevant international conventions coming under the scope of application of the new Law, these being:

  • the International Convention for the Safety of Life at Sea of 1974 (SOLAS 74);
  • the International Convention for the Prevention from Ships of 1973 and the 1978 Protocol thereto (MARPOL Convention 73/78);

 

and

 

  • the Convention on International Regulations for Preventing Collisions at Sea of 1972 (COLREG Convention 72).

 

It is highlighted that the new Law repeals the previously enacted Merchant Shipping (Marine Equipment) Laws 2002-2006 (Law 55(I)/2002 as amended).

 

Moreover, the Cypriot Maritime Law also encompasses legislation regarding:

  • the registration of vessels which is divided into permanent, provisional and parallel registration,
  • taxation of shipping activities,
  • tonnage taxes.

 

Our legal experts can provide you a complete list of all laws regarding shipping activities.

 

 

The main advantages of the Cypriot Shipping Company:

 

  • No tax on profit from the operation or management of a vessel registered under the Cyprus flag or shares in a ship owning company;
  • No capital gains tax on the sale of a Cypriot vessel or transfer of shares in a Cypriot ship owning company;
  • A liberal foreign direct investment programme (which allows for 100% foreign involvement in many sectors)
  • No exchange control;
  • Over 50 double taxation treaties in effect, with more under negotiation;
  • No estate duty on inheritance of shares in a ship owning company;
  • No income tax on emoluments of officers and crew;
  • No stamp duty on ship mortgage deeds.

 

 

Conditions of vessel ownership under the Cypriot Maritime Law:

 

The Merchant Shipping Act provides for the ownership of a boat in Cyprus. The law stipulates a foreign individual company may register a boat in Cyprus if:

 

  • the foreign company owns more than 50% of the shares of the ship;
  • the foreign company owns 100% of the shares of the ship.

 

The foreign company must have a registered address, according to the Commercial Code in Cyprus. If the company is registered outside the country, it must be controlled by a Cypriot citizen or it is entrusted to a shipping company in Cyprus.

 

Given the considerable advantages offered to Cypriot ship owners and ship management companies, it is not difficult to see why Cyprus has become a very well established a regional and international maritime center, and has grown to be one of largest third-party ship management centres in the world. The country has risen to the peak of the world’s merchant capacity rakings as thousands of commercial vessels around the globe wave the Cypriot flag. In fact, Cyprus represents 20% of the world ship management market and several of the largest management companies in the world operate out this island.

 

 

 

 

 

 

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