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Registration of Yachts and other pleasure vessels in Cyprus.
Cyprus’ geographic location is possibly one of the most strategically important locations in the world, as it lies at the gateway of Europe, Africa, Asia and the Middle East.
Therefore, Cyprus is a center where shipowners and investors from all over the world are able to carry on business in a harmonious and friendly environment. The growth in the number of Cyprus shipping companies in recent years witnesses the enormous appeal which the island has to the international community of shipowners.
The procedures for registering vessels under the Cyprus flag have been designed to attract and promote foreign registration. For this reason, they are
simple, effective and ensure that the Cyprus flag is respected by all international shipping authorities.
Why the Cyprus flag?
• Political security
– Cyprus is a sovereign Rag member of the European Union •
– European Union diplomatic protection afforded to Cyprus ships.
• Legislative framework
– Cyprus is Party to all international maritime conventions on safety, security, pollution prevention, maritime labour and health and safety giving full and complete effect to their provisions .
– Cyprus signed Bilateral Agreements on merchant shipping signed with 25 States, through which Cyprus ships receive either national or most favoured nation treatment in the ports of other States .
– 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.
– Cyprus offers a commitment for providing quality services, a competitive business and taxation environment whilst ensuring efficient shipping and the highest possible standards in safety, security and environmental protection.
• Economic benefits:
– Favorable tonnage tax scheme approved by European Union.
– No several taxes
– Full protection for financiers and mortgagees.
– Double tax avoidance treaties with 50 States.
Registration of Ships
In terms of the Merchant Shipping (Registration of Ships, Safes and Mortgages) Laws of 1963 as amended, a ship shall be deemed to be a Cyprus ship where more than 50 per cent of the shares are owned either:
(a) by a Cypriot citizen; or
(b) by a Cyprus registered company irrespective of whether such company is owned totally by aliens; or
(c) with the special permission of the Council of Ministers, by a foreign registered company with a controlling interest held by Cypriots.
Thus, a shipping company, unlike all other offshore companies, may be owned either entirely by Cypriots, or exclusively by foreigners or jointly by Cypriots and foreigners.
In accordance with the Advocates Laws of Cyprus, only lawyers registered as practising advocates in Cyprus are entitled to draft the necessary documents for the incorporation of Cypriot companies as well as to carry out all registry transactions of a vessel owned by a Cypriot company. Therefore, the application according to the law must be signed and filed by a lawyer.
Types of Registration
A. Provisional Registration
Provisional registration, which is as valid as the permanent registration, lasts for 6 months and may be effected by a Cyprus consul abroad where the vessel is not physically present in a Cyprus port. Therefore, the majority of vessels are therefore provisionally registered before permanent registration is effected.
The initial six-month period of provisional registration may be extended by a further 3 months but, unless permanent registration is effected during that period, the vessel will thereafter lose her Cyprus nationality. In any event permanent registration must be effected if the vessel calls at a Cyprus port at any time during the period of provisional registration.
An application must be submitted on behalf of the company to the Minister of Communications and Works through the Registrar of Cyprus ships, and must contain the following information:
– Name of the vessel and her flag at the time of application.
– Name of the Cypriot corporation applying for the registration of the Vessel.
– Name of the vessel under which she will be registered.
– Particulars of the vessel (type, year of built, gross and net tonnage).
– Name of the Classification Society with which the ship is entered. If the owners of the vessel contemplate a change of the Classification Society on acquiring the vessel this should also be stated.
– Intended trading area of the vessel.
– Place where the vessel will be at the time of her provisional registration, if known. This must be communicated to the Registrar of Cyprus Ships prior to the provisional registration.
– Name of the consular officer where the owners wish to effect the provisional registration of the vessel.
– Name and address of the shareholders and directors of the Cypriot company in whose ownership the vessel will be registered.
– Resolution of the directors of the Cypriot company resolving to acquire the vessel and register her in the Register of Cyprus Ships and the appointment of one or several attorneys who will attend the registration of the ship at the relevant consular office.
– Power of attorney empowering those concerned to attend to the matters of registration.
– Declaration of ownership.
– Bill of sale whereby the ship is sold to the company, duly executed by her registered owners.
– Certificate of ownership and encumbrances from the ship’s registry attesting that the ship is free from encumbrances and that she may be transferred to another registry.
– Application for license for a wireless telegraphy and/or telephony station.
B. Permanent Registration
The Permanent Registration of a provisionally registered vessel must be completed within 9 months (including the 3 months extension). It is not necessary for the ship to be present in a Cyprus port at the time of permanent registration.
The following additional documents must be lodged with the Registrar of Ships (if not filed an the time of Provisional Registration):
– Cyprus tonnage certificate (form MS12).
– Certificate of survey (form MS1);
– Application for registration;
– Copy of the agreement signed by the ship’s International Radio Accounting Authority.
– Copies of the ship’s statutory certificates;
– International tonnage certificate;
– Duly verified ship’s carving and marking note.
C. Parallel Registration
The legislation provides for the two forms of internationally accepted bareboat registration: “parallel-in” registration and “parallel-out” registration. These two options offer some very interesting opportunities for leaseback, hire purchase and finance arrangements.
C.1 Parallel-in Registration
This form of registration offers the possibility to a foreign flag vessel which is on a bareboat charter to a Cyprus shipping company to be registered in “parallel” under the Cyprus flag for a period of usually two years, which is renewable. Under this type of registration, the deletion of the vessel from the foreign registry is not required, but the foreign nationality of the vessel is suspended. However, it should be noted that the above applies only where the law of the country of the foreign registry allows for the parallel registration of the ships registered in its registry.
C.2. Parallel-out Registration
With the Parallel-out Registration Cypriot ships may be bareboat chartered to a foreign person or company and registered “parallel” in a foreign register for the duration of the charterparty. This allows the financing of a ship and her mortgaging under the Cyprus flag and then her registration in a foreign registry through a bareboat charter arrangement.
The parallel-out registration of a Cypriot ship is possible if she is bareboat chartered to a foreign individual or corporation and the law of the country of the foreign registry allows the parallel registration of vessels of another registry, under prerequisite conditions similar to those set out for the parallel-in registration of ships in the Cyprus Register of Ships.
This type of registration is possible for Cypriot ships which are provisionally or permanently registered in the Cyprus Register of Ships.
The parallel-out registration of a Cypriot ship must be approved by the Minister of Communications and Works.
As already stated above, a yacht can be registered under the Cyprus flag if it is acquired by a Cypriot individual or a Cypriot legal entity. Thus, it is necessary for foreigners to set up a “yacht owning company” and transfer the yacht to that company.
The information and documentation needed prior to filing the application with the Registrar of Cyprus Ships which is similar to the Provisional Registration is the following:
– Company Certificates of the yacht owning company by the Registrar of Companies.
– Existing name and present flag of the yacht;
– Gross and net tonnage of the yacht;
– Place and year of built;
– Place where the yacht can be usually found;
– International sign.
– Serial no./Plate Hull no.
– Proposed name of the yacht.
– “Seaworthy Certificate”, in cases where the yacht is not newly built. Such a certificate is issued by a surveyor of a classification society or a Cyprus government surveyor.
– “Builders Certificate” (for newly built yachts).
– Official evidence of ownership and freedom of encumbrances (for non-newly built and not registered under any flag).
– Certificate of deletion from previous registry or a certificate that the yacht is owned by the sellers and has no encumbrances (for non-newly built yachts).
– Bill of sale duly stamped and legalized.
– Power of attorney.
– Application for a radio license.
A. Application fees: Approximately €100.
B. Approval and change of ships name: Approximately €200.
C. Registration fees: The fees for the registration of a vessel are calculated by the Registrar of Ships after the submission of the relevant application according to the vessel’s gross tonnage. The minimum fee is approximately €200 and the maximum fee is approximately €5.000.
For more information please contact our law firm at firstname.lastname@example.org