ARTICLE
26 February 2009

Taxation Of Shipmanagement Companies

EN
Elias Neocleous & Co LLC

Contributor

Elias Neocleous & Co LLC is the largest law firm in Cyprus and a leading firm in the South-East Mediterranean region, with a network of offices across Cyprus (Limassol, Nicosia, Paphos), Belgium (Brussels), Czech Republic (Prague), Romania (Budapest) and Ukraine (Kiev). A dynamic team of lawyers and legal experts deliver strategic legal solutions to clients operating in key industries across Europe, Asia, the Middle East, India, USA, South America, and China. The firm is renowned for its expertise and jurisdictional knowledge across a broad spectrum of practice areas, spanning all major transactional and market disciplines, while also managing the largest and most challenging cross-border assignments. It is a premier practice of choice for leading Cypriot banks and financial institutions, preeminent foreign commercial and development banks, multinational corporations, global technology firms, international law firms, private equity funds, credit agencies, and asset managers.
The Cyprus Department of Merchant Shipping has recently issued a circular reminding shipmanagers of the arrangements for assessment and payment of their liabilities for 2008.
Cyprus Wealth Management

The Cyprus Department of Merchant Shipping has recently issued a circular reminding shipmanagers of the arrangements for assessment and payment of their liabilities for 2008.

Shipmanagers are normally taxed on the basis of the tonnage and age of ships under their management. However, under section 19 of the Income Tax Law of 2002 they may opt to be taxed according to the prevailing Income Tax Law at a rate of 4¼% on their income from ship management services.

Shipmanagers who opt for the alternative basis of taxation are required to provide the Department of Inland Revenue with an annual Confirmation of Shipmanager´s Status issued by the Department of Merchant Shipping certifying that the company is eligible to be taxed on this basis.

Shipmanagers who have not opted for the alternative basis of taxation should obtain and complete the relevant Declaration for the Taxation of Shipmanagement Services (Declaration). Forms may be obtained from the Department of Merchant Shipping or downloaded from its website, which also includes a calculator for the accurate calculation of the tax on each vessel.

The Department has also announced a new tax exemption. Shipmanagers are entitled to tax exemption in respect of: "any Community ship to which the provision of shipmanagement services in relation to its crewing and technical management is entirely contracted to a Cyprus or a Community shipmanagement company, which has an office in Cyprus staffed with sufficient (in number and qualifications) personnel, for technical, administration and accounting matters relating to ships."

Community ships for which the shipmanagement agreement was valid throughout 2008 will be entitled to the exemption.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More