The Shipping Sector in Cyprus: Competitive Advantages, Ship Registration Procedures and the latest developments

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A. The Commercial Overview of the Shipping Industry in Cyprus

The history of the sea, trade and shipping in Cyprus traces back thousands of years. When Cyprus gained its independence in 1960, it heralded a new era of prosperity that witnessed an upsurge in the economy and modernisation of the business and commercial sectors. The development of the shipping industry in Cyprus began in 1963 with the introduction of legislation concerning the registration of ships, the terms of employment of sailors and the relevant taxation. In 1963, the Cyprus fleet consisted of two vessels of 96 gross tonnage (GT), while in 2020, the Cyprus fleet reached the impressive number of 1,735 vessels with a total GT exceeding 24.5 million.

Internationally, Cyprus takes pride in its re-election to the International Maritime Organization (IMO) Council for 2020–2021, ranking fourth in Category C with 140 votes, higher than ever before, strengthening Cyprus’ role in the European and international decision-making process. Cyprus has been re-elected into Category C every year since 1987. Additionally, in October 2020, Cyprus was elected for the first time to the Presidency of the Executive Committee of the Mediterranean Memorandum of Understanding on Port State Control, of which it is a Member State. Moreover, in December 2019, Cyprus successfully prolonged its Tonnage Tax and Seafarer Scheme for the next 10 years (until 31 December 2029), following extensive negotiation and discussion between the Shipping Deputy Ministry to the President of Cyprus (SDM) and the European Commission. The Scheme provides competitive advantages, including, among others, a wider list of eligible vessels and ancillary activities and discount rates for environmentally friendly vessels. Cyprus had the first ever-open registry within the European Union, with a comprehensive, transparent tonnage tax system approved by the European Union.

Cyprus has one of the largest registered merchant fleets in the world, being, at the same time, a well-established shipping and ship management centre, located close to the Suez Canal, at the eastern edge of Europe, at the core of bustling air and shipping routes connecting Europe, Asia and Africa. Notably, in 1981, the Cypriot fleet was ranked 32nd globally, in terms of its size, whereas currently, Cyprus has the 11th largest fleet in the world and the third largest in Europe. Cyprus has a large resident shipping industry, with more than 220 shipping-related companies based in the country which have approximately 4,500 employees. Of these, 87 per cent are controlled by EU interests. The Register of Cyprus Ships is also one of only two open registries within the European Union, and allows non-Cypriot citizens to register their ships under the Cyprus flag, provided that they fulfil the specific conditions of ownership that the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended, require. Cyprus has also concluded 27 merchant shipping bilateral agreements, through which Cyprus ships receive either national or most favoured nation treatment in the ports of other states. Those agreements with labour-supplying countries provide for specific terms of employment that are beneficial to both shipowners and seafarers.

The SDM, which is responsible for maritime and shipping matters, was established on 1 March 2018, replacing the Department of Merchant Shipping. Prior to this, the Department of Merchant Shipping had been a distinct entity within the Ministry of Transport, Communications and Works of the Republic of Cyprus, since 1977 and was responsible for the control and development of shipping in Cyprus. The date of the SDM’s establishment (1 March 2018) is marked as a historic day for Cyprus shipping because the SDM is an autonomous deputy ministry, dedicated entirely to Cyprus’ maritime industry, with strategically located overseas maritime offices – in Piraeus, Brussels, Rotterdam, Hamburg, London and New York City – offering services to seafarers and Cypriot ships. Since its establishment, the SDM has developed with regard to its internal restructuring, aiming to make Cyprus’ maritime administration even more modern, efficient and industry-focused, and thus, even more business-friendly to Cyprus-related shipping companies. The SDM is headquartered in Limassol, the shipping and financial capital of Cyprus.

Its mission is based on the safeguarding and further development of Cypriot shipping as a safe, socially responsible and sustainable industry; the enhancement of the national economy; and the creation of jobs, specialisation and expertise in the sector. At the same time, the SDM has been implementing a comprehensive “Blue Growth” strategy that not only includes enhancement and updating of the shipping regulatory framework and processes, but also focuses on digitalisation, the promotion of blue careers and shipping education, and a focus on maritime innovation and contribution to the development of responsible environmental policies and solutions.

The SDM strongly encourages and supports research and innovation initiatives. Examples such as the Cyprus Marine and Maritime Institute and the Cyprus Foundation of the Sea promote technological innovation, bringing together the academic world with the public and private sector to develop innovative systems providing solutions to respond to the green and digital transformation of the sector. At the same time, the steady growth of the three maritime academies operating across the country with around 300 students, the introduction of a maritime direction in secondary education and the extension of the SDM’s grants and scholarships aim to ensure the continuous supply of high-calibre human talent into the Cypriot shipping market.

The establishment of the SDM clearly reflects the importance of the shipping sector in Cyprus and the significance that the government places on its development, since the yearly contribution of merchant shipping to the Cyprus economy is extremely high, with recent figures indicating that shipping accounts for approximately 7 per cent of the country’s gross domestic product (GDP). Pursuant to the Central Bank of Cyprus’ report (CBS report) published on 11 November 2021, Cyprus’ ship management revenues increased to €447 million during the first half of 2021 (2021H1) or 4,1% of Cyprus’s GDP (as turnover), marking a gradual recovery from the COVID-19 pandemic and the associated decline in economic activity observed during 2020.

Shipping stands as one of the financially strongest and most significant pillars of the Cypriot economy. More specifically, it has been characterised as a ‘blue economy’, with the sector contributing around €1.034 billion to the island’s GDP per annum. More than 5 per cent of the world’s fleet is controlled from Cyprus and more than 20 per cent of the world’s third-party ship management activity (more than 200 shipping companies) is managed by companies based in Cyprus, making the island the largest third-party ship management centre within the European Union and among the top three in the world, providing ship management services to around 3,300 ships under various flags, with a net tonnage of 47 million. In addition, around 100,000 seafarers are employed on board Cypriot ships and 9,000 personnel are employed on shore with the sector employing around 3 per cent of Cyprus’ workforce.

The recent discovery of hydrocarbons in the exclusive economic zone of the Republic of Cyprus widens the horizons of the Cypriot shipping industry, creating synergies and new prospects. Offshore exploration and production of oil and gas, as well as their transportation ashore, require specialised ships and equipment, and specialised supporting services. A new industry is emerging in Cyprus to meet the needs of the offshore activities. Many Cypriot-based shipping companies are very keen to be involved in the industry and some have taken this step by broadening their activities. It is also anticipated that additional shipping companies operating in non-EU jurisdictions will relocate their offices and operations to Cyprus to explore the benefits of the emerging eastern Mediterranean offshore market. On the basis of the above, Cyprus can develop into an important energy centre in the Mediterranean region, with new shipping and energy projects, and the policy of its government includes Cyprus’s future maritime transport needs for the exploitation of hydrocarbons.

B. General Overview of the Legislative Framework

Cyprus is a common law jurisdiction, meaning that its legal framework is based on both legislation and case law. The Cypriot legal system from 1878 until its independence in 1960 was based on the English legal system. The laws enacted for the colony applied the principles of common law and equity in Cyprus, and many of those laws are still in force today.

Shipping legislation in Cyprus is essentially based on the UK model. The Register of Cyprus Ships is regulated by the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended, which are similar to the UK’s Merchant Shipping Acts 1894–1954. In addition, Cypriot shipping companies are regulated by Chapter 113 of the statute laws of Cyprus, which is modelled on the UK Companies Act 1948.

As far as admiralty law is concerned, both the Administration of Justice Act of 1956 (AJA), which defines the admiralty jurisdiction of the Supreme Court of Cyprus, and the Cyprus Admiralty Jurisdiction Order 1893, which regulates the procedure and rules before the Supreme Court, apply in Cyprus.

Moreover, following the accession of the Republic to the European Union in 2004, all EU maritime laws, including treaty provisions, regulations, directives and decisions (acquis communautaire) apply in Cyprus. Several international maritime conventions on safety, security, pollution prevention, maritime labour and health to which Cyprus is a signatory or that have been incorporated into Cyprus law also regulate the shipping industry.

C. Competitive Advantages

1. Reputation of the Cyprus flag

  • A sovereign EU flag with long tradition.
  • Member of the IMO Council since 1987.
  • President of the Executive Committee of the Mediter­ranean MoU since October 2020.
  • Classified in the ‘White List’ of the Paris and Tokyo MoUs on Port State control.
  • Excluded from the ‘List of Targeted Flag States’ of the US Coast Guard.
  • Strong involvement in international shipping fora (IMO, ILO and EU).
  • 27 Merchant Shipping Bilateral Agreement.
  • Signatory to all international maritime conventions.

2. Taxation

CYPRUS TONNAGE TAX SYSTEM (TTS)

  • EU approved simplified Tonnage Tax System (i.e. no connection to corporate tax), extended to December 2029.
  • Taxed on the Net Tonnage of the ships, instead on the actual profits.
  • Available to Owners of Cyprus ships, Owners of Foreign ships, Charterers and Ship managers.
  • Wider list of eligible vessels and ancillary activities.
  • Discounted rates up to 30% on TTS for environmentally friendly vessels.
  • Owners of Cyprus Ships fall automatically within the scope of the TTS (no need to exercise an option).

TAX EXEMPTIONS:

  • NO TAX on income derived from the operation of qualifying ship(s) engaged in qualifying activity.
  • NO TAX on the income or profit made from the sale of a qualifying ship.
  • NO TAX on dividends paid to shareholders out of profits made from the operation or from the sale of qualifying ship(s).
  • NO TAX on income derived from the management of a qualifying ship.
  • NO TAX on dividends paid to shareholders out of profits made from the management of a qualifying ship.
  • NO TAX on bank interest earned on working capital of a qualifying ship.
  • NO TAX on the salary or other benefits of eligible seafarers on board a qualifying EU ship.

3. Economic benefits:

  • Nο Registration and Mortgage fees for ocean-going ships.
  • No cost for the issuance of the initial certificates of ocean-going ships.
  • Competitive yacht registration costs and fees.
  • Full protection for financiers and mortgagees under Cyprus flag.
  • Cyprus does not impose stamp duty on mortgage deeds on a ship or other security documents.
  • No registration duty is payable on the shares of a shipping company.
  • No estate duty on the inheritance of shares in a ship-owning company.
  • Low set-up and operating costs for companies.
  • Double tax relief on income subject to tax both in Cyprus and overseas.
  • Double tax avoidance agreements with more than 65 States

4. Cyprus Ship Registry

  • An ‘open’ EU-approved Ship Registry.
  • Registration of the vessel within three to five working days.
  • Simplified Registration Procedures.
  • Competitive fees and dues.
  • Comprehensive and pioneering national legislation for the protection of Cyprus ships from piracy and other unlawful acts including a legal framework allowing and regulating the use of private armed security personnel in high-risk areas.

5. Services

  • Competent officers & surveyors available 24/7.
  • Maritime offices in Piraeus, London, Hamburg, Rotterdam, New York and Brussels.
  • A network of local inspectors of Cyprus ships, covering important ports worldwide in order to ensure efficient and effective control of Cyprus ships and to avoid detentions by port state control.
  • Provision of online services:
    1. E-Registration for ships (online applications).
    2. E-Verification of Cyprus Registry Certificates.
    3. Management of the electronic Tonnage Tax System.
    4. eSAS - Web services for the registration of seafarer and the recognition of certificates of competency.
    5. “Seafarers Career Information System” (SCIS) - A career database to facilitate the employment of seafarers.
    6. E-Deck logbooks and E-Record Books (ERBs) onboard Cyprus-flagged vessels.

6. Seafarers status

  • Formal crew change process during the COVID-19 outbreak.
  • Vaccination programme for Seafarers onboard Cyprus-flagged and Cyprus-managed vessels.
  • No nationality restrictions for crew and seafarers.
  • Recognition of seafarers’ certificates of competency of 70 countries.
  • Tax exceptions.

7. Green incentives programme  

  • Discounted rates on Tonnage Tax Scheme for environmentally-friendly vessels.
  • State aid scheme for coastal passenger vessels.

8. Recent Developments  

  • Establishment of Shipping Deputy Ministry.
  • Development of Cyprus Ports.
  • Newly built marinas.
  • Redevelopment of fishing shelters.
  • Formulation of the national maritime spatial plan.
  • Development of blue growth strategy.

9. Shipping innovations in Cyprus  

Establishment of:

  • Cyprus Marine and Maritime Institute
  • Cyprus centre for Land, Open Seas and Port Security
  • Cyprus Foundation of the Sea

D. Ship Registration Procedures

a. Cyprus' Registry

Cyprus has an EU-approved open registry. The ship registry unit of the SDM is responsible for the registration of ships in the Register of Cyprus Ships and in the Special Book of Parallel Registration. In addition, it carries out all other transactions related to Cyprus ships, such as the transfer of ownership and the deregistration of ships, the registration of mortgages on Cyprus ships and other transactions related to such mortgages.

Under the Advocates Laws, Chapter 2, only lawyers registered as practising advocates in Cyprus are entitled to carry out registry transactions, acting on behalf of the owner and, therefore, the first step to be taken by persons interested in registering a ship under the Cyprus flag is to engage the services of a locally registered advocate.

b. Small Vessels Registry

All ships (other than portable or collapsible crafts for use by bathers) such as recreational crafts, personal watercraft, floatable crafts, working boats, high speed small vessels, sailing boats, fishing boats, jet skis and lighters, with a length of less than 13 metres, which only sail in the territorial waters of the Republic of Cyprus or in the Sovereign Base Areas, should be registered in the Small Vessels Registry of the SDM, regulated by the Emergency Powers (Control of Small Vessels) Regulations of 1955 (PI 740/1955). All vessels registered in the Small Vessels Registry obtain a unique number that contains the prefix -LL and five numbers.

c. Port of registry

On 27 September 1974, the port of Limassol became the official port of registry of the Republic of Cyprus, by virtue of the Merchant Shipping (Temporary Provisions) Law of 1974 (Law No. 45/1974), as a result of the illegal Turkish invasion and occupation of the northern part of the Republic of Cyprus. Prior to this, the port of Famagusta, currently under Turkish occupation, was the official port of registry of the Republic.

d. Types of registration

According to the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended, which are the main statutes for all matters relating to the registration of ships and related transactions in the Register of Cyprus Ships, prima facie any ship used in navigation and not propelled by oars is eligible to be registered provisionally, permanently or in parallel (parallel-in and parallel-out) in Cyprus, given that she meets the age-related and type-related requirements, along with the ownership prerequisites.

The aforementioned Laws allow the provisional registration of a ship for a period of six months, provided she is out of the territorial waters of the Republic at the time of her registration and that she is not already a Cypriot ship. The provisional registration may be extended for another three months under special circumstances. Conversely, when a ship is in the territorial waters of the Republic, there is no option other than to ‘permanently’ register her directly.

e. Government policy on the registration of ships

The Registrar of Cyprus Ships does not consider applications for registering ships in either the Register of Cyprus Ships or in the Special Book of Parallel Registration if the ship:

  • at the time of the registration application, is banned (on PSC grounds) from entering ports of any States party to a PSC MOU or is banned by a State from entering its ports;
  • has been detained on PSC grounds on three or more occasions during the two-year period prior to the date of application by States of the Paris, Tokyo or Mediterranean MOU or by the USCG;
  • has been constructed for exclusive use on inland navigation or to be used exclusively on inland navigation (e.g., in internal waters, rivers, inland waterways, canals, natural or artificial lakes, water reservoirs or dams); or
  • at the time of filing the registration application, does not satisfy the conditions related to its age.

f. Condition of ownership

According to the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended, a ship is eligible for registration under the Cyprus flag if:

  • more than 50 per cent of the shares of the ship are owned by Cypriot citizens or by citizens of other EU or EEA Member States who, if not permanent residents of Cyprus, have appointed an authorised representative in Cyprus; or
  • 100 per cent of the shares are owned by one or more corporations that have been established and operate:
  1. in accordance with the laws of Cyprus and have their registered office in the Republic;
  2. in accordance with the laws of any EU or EEA Member State and have their registered office, central administration or principal place of business within the EU or EEA and that have either (1) appointed and maintained an authorised representative in Cyprus; or (2) ensured that the management of the ship is entrusted in full to a Cypriot or a Community ship management company with its place of business in Cyprus; or
  • outside Cyprus or outside any other EU or EEA Member State but controlled by Cypriot citizens or citizens of Member States and have either appointed an authorised representative in Cyprus or ensured that the management of the ship is entrusted in full to a Cypriot or a Community ship management company having its place of business in Cyprus.

The corporation is deemed to be controlled by Cypriots or citizens of any other Member State when more than 50 per cent of its shares are owned by Cypriots or citizens of any other Member States or when the majority of the directors of the corporation are Cypriot citizens or citizens of any other Member State.

g. Appointment of authorised representative

According to the relevant provisions of the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended, an authorised representative may be:

  • a Cypriot citizen or a citizen of any other EU Member State (including Norway, Iceland and Liechtenstein as parties to the European Economic Area) who is resident in the Republic within the meaning of the income tax laws of the Republic;
  • a partnership that has been established and registered in accordance with the provisions of the Partnerships and Business Trade Law, having its place of business in the Republic and employing permanent staff in the Republic;
  • a corporation that has been established and registered in accordance with the provisions of the Companies Law, having its place of business in the Republic and employing permanent staff in the Republic; or
  • a branch of any foreign company that has been established and registered in accordance with the provisions of the Companies Law, having its place of business in the Republic.

In practice, the authorised representative’s main responsibility is to be the contact link between the Registrar and the shipowner.

Any document that is required to be served to the shipowner, is deemed to be duly served if it is delivered to his or her representative. The authorised representative is then obliged to contact and inform them accordingly. On the other hand, however, authorised representatives shall not be responsible for any action or omission made by the shipowner. Therefore, a shipowner has to select his or her representative carefully.

h. Age-related requirements

The entry inspection and additional inspections specified in the table below are required to be carried out if the age of the ship is equal to or greater than the number of years indicated under the related conditions corresponding to the type of the ship.

Type of shipEntry inspection?Additional inspection required?
Cargo shipsYes, if ≥ 15 yearsNo
Passenger ships engaged in international or short international voyages or engaged in domestic voyages within the territory of a state other than CyprusYes, if ≥ 20 yearsYes, if ≥ 20 years, biennially
Fishing vessels under 25 years of ageYesYes, annually
Ships of types other than those listed aboveYes, if ≥ 15 years*No
*  Pleasure yachts, non-propelled craft and other vessels with a GT of less than 500 may be excluded from this condition.

All ships (except passenger ships and fishing vessels) of an age exceeding 25 years are required to comply with the following requirements:

  • entry inspection with satisfactory results that must be completed prior to the registration of the vessel in the Register of Cyprus Ships; and
  • provision of the ship’s records, age and detention history to justify such registration.

i. Timescale of entry inspection and additional inspections

The entry inspection shall be carried out within six months of the date of provisional, parallel-in or direct permanent registration of the ship. If a ship that is required to undergo an entry or additional inspection (or both) is laid up or is to be laid up within three months of the date of provisional, parallel-in or direct permanent registration, the entry inspection and, where required, the additional inspection will be postponed for the duration of the lay-up period and should be carried out no later than six months after the lay-up period ends.

If the parallel-out registration of a ship that is required to undergo an entry or additional inspection (or both), is effected within three months of the date of the provisional or direct permanent registration, the entry inspection and, where required, the additional inspection are postponed while the ship is registered in parallel in a foreign registry and should be carried out no later than six months after the date of expiry or termination of the period of parallel-out registration.

j. Technical Standards for certain categories of vessels issued under the Government Policy on the Registration of Vessels in the Cyprus Register of Ships

The SDM on 13 April 2021 established technical requirements for certain categories of vessels with respect to their registration in the Registry of Cyprus Ships. The purpose of the Standards is to specify technical requirements on areas not currently covered by National, European Union, or International Legislation, as well as to inform parties interested in the registration of vessels to whom the Standards apply in the Registry of Cyprus ships, of the available options offered by the SDM.

In particular, and in accordance with the categorization established within the Standards, these are applicable to the following categories of vessels:

  • (Category A - Cargo ships of more than 24 metres in load line length and below 500GT.
  • (Category B - Motor or sailing vessels used for pleasure and engaged in trade, of more than 24 metres in load line length and below 500GT carrying up to 12 passengers. Sail training vessels are also included in this category.
  • (Category C - Motor or sailing vessels of more than 24 metres in load line length and below 500GT carrying up to 12 passengers, which at the time, are considered to be pleasure vessels not engaged in trade.
  • (Category D - Vessels used for pleasure and engaged in trade carrying from 13 up to 36 passengers.

It is highlighted that the said technical Standards apply to Yachts and Mega Yachts.

k. Parallel registration

The Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended allow the parallel registration of vessels that are used in navigation and not propelled by oars in the Special Book of Parallel Registration. By parallel registration, a foreign vessel can be registered, for a certain period of time, under the Cyprus flag while at the same time continuing to be registered, in parallel, in the foreign registry and vice versa.

a. Parallel-in registration

Parallel-in registration is used for cases of bareboat chartering where a bareboat charterer of a foreign ship wishes to register the ship in parallel under the Cyprus flag. The deletion of the ship from the registry of the state in which its ownership is registered is not required. However, its right to fly the flag of the state of registry and to have its nationality is suspended and the foreign registry remains operative only with respect to the ownership and encumbrance’s status of the ship. The period of parallel-in registration is usually two years and is renewable.

b. Parallel-out registration

Parallel-out registration is used when a bareboat charterer wishes to register, in-parallel, a vessel that is already registered provisionally or permanently under the Cyprus flag, to a foreign registry. The deletion of the ship from the Register of Cyprus Ships where its ownership and mortgages are registered is neither required nor allowed. However, its right to fly the Cyprus flag and to have the Cypriot nationality is suspended. The period of parallel-out registration may be up to three years and is renewable.

l. Registration of mortgages

A mortgage against a ship can be registered at any time after the completion of the vessel’s registration (provisional, permanent or parallel-out) under the Cyprus flag.

By a registered mortgage, the shipowner can secure a loan or other financial benefits, subject to the conditions agreed between the contracting parties, without the need for exchange control permission. The creation of a mortgage under Cypriot law is not allowed on vessels registered parallel-in in the Register of Cyprus Ships. Under the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963, as amended, there is full protection for financiers and mortgagees and there is no stamp duty on ship mortgage deeds or other security documents.

m. Classification societies

As at July 2019, Cyprus had approved all 12 International Association of Classification Societies members with no reservation on their approval. A model agreement has been drafted, governing the relations between the Cypriot government and the Recognised Organisations (classification societies) for statutory certification services. More specifically, the new agreement which was signed between the Republic of Cyprus and the Recognised Organisations, provides survey and certification services to ocean-going Cyprus flag ships on behalf of the Republic.

The conclusion of the new agreement with the 12 specialised and internationally acclaimed organisations was required as a result of legislative developments in shipping and to incorporate more flexible and technologically advanced procedures with the use of electronic services and certificates. In the new agreement the Croatian and Indian Registers of Shipping are included for the first time in the history of Cypriot shipping.

The performance of the classification societies is checked through biannual audits for the SDM or on auditing their performance. Any defect in their performance is discussed at the audits.

E. Latest developments

a. Online services in the Register of Cyprus Ships

The covid-19 crisis has resulted in the rapid advancement of technology in the shipping sector and especially in Cyprus. To that extent, the SDM, as the competent maritime authority made the best use of the digital technologies.

b. Prolongation of the Cyprus Tonnage Tax System

In December 2019, that the assessed scheme of Cyprus is compatible with the internal market and in line with the EU Guidelines on State aid to maritime transport, prolonging the Cyprus tonnage tax and seafarer scheme for next ten years (till 31 December 2029). The scheme provides competitive advantages, including a wider list of eligible vessels and ancillary activities, discount rates for environmentally friendly vessels and, more importantly, the companies operating under the current TTS can continue to do so with no major changes.

c. Re-establishment of the maritime passenger link between Cyprus and Greece

The Cyprus-Greece ferry link is still on the top priority of the SDM and the Cypriot government hopes that the European Commission will allow better terms that will attract an investor after no bidders showed an interest in the original contract. To that extent, the SDM announced on 25 November 2021 the launch of a new tender (Tender No. SDM 14/2021) to establish a maritime passenger link between Cyprus and Greece, subsidised by State funds in accordance with the European Union rules. The deadline for tender submissions is 12.00 pm on the 28th of January 2022. The ferry connection will connect Limassol or Larnaca port with the port of Piraeus with the possibility of an intermediate stop in a Greek island port on the way to Piraeus and vice versa.

d. Effects of Brexit on Cypriot shipping

The risks to Cypriot shipping from Brexit seem to be minimal. British companies are in the process of registering ships to the Cypriot registry and other companies have moved their headquarters to the island. On a broader level, Brexit will affect shipping companies’ income and trade, but Cypriot shipping has not been affected negatively, for the time being.

e. Seafarers’ Vaccination programme of Cyprus flag

Cyprus was one of the first countries that recognised seafarers as key workers and implemented a formal crew change process. These measures resulted in more than 20,000 seafarers being repatriated or able to return to work since May 2020. Cyprus continues to prioritise seafarer welfare issuing the Circular 32/2021, which outlines plans to provide COVID-19 vaccinations to all seafarers on Cyprus-flagged and Cyprus-managed vessels. The number of such eligible seafarers are calculated around 40,000. Cyprus is also exploring the potential to become a vaccination hub for all visiting seafarers, proactively supporting long-term progress for seafarer welfare.

f. Financial incentives for environmental preservation

As a leading maritime nation, Cyprus recognises the need to encourage and reward those realising emissions reductions. To this extent, the Shipping Deputy Ministry has announced a new range of green incentives to reward vessels that demonstrate effective emissions reductions. The green incentives programme of the Shipping Deputy Ministry supports shipowners in making sustainable choices and investing in new green technologies and cleaner operations.

g. The Action Plan of the Cyprus Flag during the COVID-19 Pandemic

Since February 2020, the Shipping Deputy Ministry has issued a plethora of circulars, taking urgent provisional measures for the operation of Cypriot ships and minimising risks to seafarers, passengers and others on board Cypriot ships during the COVID-19 outbreak.

h. The Development of the Ports and Marinas in Cyprus

Following the redevelopment of the old port of Limassol that is now available for pleasure boats and the success of Limassol Marina, which opened in 2014, work has been under way to develop a number of new marina projects to bolster Cyprus’s role as a yachting location in the Eastern Mediterranean. In addition, developments have been seen in the ports of Cyprus.

i. The Development of the Fishing Industry in Cyprus

Cyprus has a long-standing fisheries tradition. Despite its limited contribution (around 0.8%) to GDP, the Cypriot fisheries sector holds significant socio-economic importance, particularly in coastal areas. Over 300 types of fish have been found in the sea around Cyprus, some of them immigrants from the Red Sea through the Suez Canal. The Cypriot fishing fleet comprised 858 vessels in 2019, with a combined GT of 3,811 and a total engine power of 40,801 kW.

F. Outlook

Given the unique characteristics of the island, Cyprus will always have a prominent place in the global maritime sector. Cyprus’ maritime tax system, registration procedures and other maritime policies attract numerous shipowners annually, making the fleet of ships registered under the Cyprus flag one of the largest fleets in the world. Cyprus is a modern, efficient and integrated shipping cluster ranked among the leading in the world. Limassol, the heart of the Cyprus maritime cluster, hosts more than 200 companies offering shipping and shipping-related services from ship ownership and ship management to shipping insurance, shipping finance, brokerage, bunkering, ballast water system production, marine training and maritime technology in satellite and radio systems.

Recent changes in shipping lean towards taking drastic measures to minimise air pollution by ships, such as reducing the sulphur content of the fuel to one-seventh of the previous limit (now 0.5 per cent as opposed to 3.5 per cent five years ago), have created a number of legislative instruments or amended existing ones, such as MARPOL (73/78). Cyprus has adopted all related legislation. This is the main challenge the shipping sector is facing today and, to meet the targets, effort will be required across the industry for a number of years, for various reasons, including the availability of compliant fuels, the effects on ships’ machinery and the training of crews on proper documentation.

Cyprus has amended its policy on registration of ships, eliminating the age limit, and placing trust in the improved quality of ships and the global system of monitoring ship performance in regard to safety and pollution prevention practices. Another interesting innovation is the policy on taxation of shipping activities and the environmental incentives, which offer attractive taxation options to shipowners that have been affected by the recent financial crisis and global recession. In addition to the above, the abolishment of ships’ initial registration fees aims to boost the Cypriot registry’s competitiveness and attract more ship registrations.

However, the crucial factor that could dramatically drive the growth of Cyprus’ shipping industry, resulting in the further expansion of Cyprus’ registry, is a viable and functional solution to the lifting of the Turkish embargo on Cypriot ships, which, since 1987, has been the ‘Achilles heel’ of the Cyprus flag, hindering the development of the Register of Cyprus Ships as well as that of Cyprus’ ports.

To learn more contact the Author.

Author: Zacharias Kapsis, Shipping Lawyer

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