As announced back in January the European Commission (EC) approved the extension of the Tonnage Tax system applicable to the shipping industry in Cyprus for 10 years starting from 1 January 2020.
Based on the EC decision a bill has been prepared by the Cyprus government and placed for review and voting by the Parliament in order to ratify the extension of the Tonnage Tax system and the Seafarer scheme. The bill includes amendments on the existing law on five areas, which are briefly mentioned below.
The definition of vessels qualifying for the system becomes clearer, with a clear distinction between all types of ships which are eligible and those which can not qualify.
Furthermore, ancillary activities which qualify as shipping-related are determined so that they can also qualify for the Tonnage Tax system.
The third amendment concerns the conditions under which a ship owner charters its vessels on a bareboat basis.
An additional change relates to the 30% tax deduction for vessels which are friendlier to the environment, which is extended from Cyprus flag vessels only to all EU flag vessels. The specifications for considering a vessel as environmentally friendly are determined via a decision of the Council of Ministers of the Cyprus government.
Finally, for what concerns the Seafarer scheme, Cyprus has agreed to extend the relevant benefits from Cyprus-flagged vessels only to all vessels flying the flag of any EU or EEA Member State.
It is reminded that the EC concluded that the Tonnage Tax system and Seafarer scheme offered by Cyprus will contribute to the competitiveness of the EU maritime transport sector and encourage ship registration in Europe, while at the same time promoting high social, environmental and safety standards and ensuring a level playing field.