The Republic of Cyprus, being a leading maritime state, understands the importance of promoting sustainable practices within its shipping sector. More specifically, the Shipping Deputy Ministry of Cyprus is well known for its practices for environmental developments at a worldwide level. One of the top priorities of the Shipping Deputy Ministry of Cyprus is the support of sustainable shipping by way of adopting various measures at a worldwide level for the reduction of emissions and to achieve a sustainable future of the shipping industry, such as the use of more environmentally friendly fuels, the development of relevant infrastructure, the electrification of ships and the use of energy efficiency technologies. By combining all of the aforementioned options, an opportunity is given for the improvement of the commercial and environmental sustainability of the industry, while at the same time shipowners are rewarded for investing in sustainable practices by way of financial incentives.
In this regard, in an effort to decarbonise Shipping, the Shipping Deputy Ministry of Cyprus is taking proactive steps to incentivize and accelerate decarbonisation by announcing a revised series of green incentives to reward ships that demonstrate effective reductions in Greenhouse gas emissions.
Started from January 2024, any vessel that takes measures for the reduction of its climate impact, its Annual Tonnage Tax will be reduced by up to 30%. Thus, this practise will ensure that any shipowner will be rewarded for his/her sustainable shipping efforts.
The benefit of such reduction of the Annual Tonnage Tax, can only be applied to Cypriot and Community ship owners by meeting the criteria of the environmental incentives as mentioned below:
• EEXI – ships that have achieved a reduction of the Achieved Energy Efficiency Index of the Existing Ship in relation to the Required Energy Efficiency Index of the Existing Ship by a percentage of more than 10%, (regulations 19, 23 and 25 / Annex VI of the revised MARPOL) will receive the corresponding annual tonnage tax discount between 5 – 25%.
• IMO DCS – the environmental incentive related to the Data Collection System (IMO DCS) of the International Maritime Organization, applies to ships of 5,000 gross tonnage and above with declared hours at sea of at least 4,380 per year and complying with regulation 27 of Annex VI of the revised MARPOL. Ships that achieve a reduction in the ratio of total fuel consumption to total distance travelled between two consecutive reference periods of more than 4% will receive an annual tonnage tax rebate of between 10 – 20%
• CII – the environmental incentive is related to the Carbon Intensity Index (CII) of the IMO and applies to ships of 5,000 GT and above, which are subject to the provisions of Regulation 28 of Annex VI of the amended MARPOL Convention. Ships that achieve Class A or B operational carbon intensity in one year, with declared hours at sea of at least 4,380 per year will receive an annual tonnage tax rebate of 10% – Class B and 20% – Class A.
It is worth mentioned, that any detention of a vessel due to environmental reason upon an inspection by the ECL, and/or violation by a vessel of any European Commission regulation regarding the environmental protection and/or decommission of a vessel during the calendar year, leads to non-eligibility for the environmental incentive.
In conclusion, the environmental incentives introduced by the Shipping Deputy Ministry of Cyprus, represent a significant step towards to achieving decarbonisation in the shipping industry. By providing these incentives, the Republic of Cyprus is positioning itself as a leader state in sustainable shipping practices and strengthening the shift of the Cyprus flag to the use of environmentally friendly vessels and methods. As the world transitions towards a low-carbon future, Cyprus is paving the way for a cleaner and more environmentally friendly shipping sector by demonstrating the commitment of Cyprus Shipping Industry to the Green transformation.
Bareboat Chartering by way of definition, is the lease and/or renting of a boat without a crew and skipper. The Deputy Ministry of Shipping (hereinafter the “DMS”) has introduced Circular 22/2022 (hereinafter the “Circular”), which outlines the regulations and guidelines for bareboat chartering activities within the territorial waters of the Republic of Cyprus (hereinafter the “RoC”), offering a framework that ensures both safety and enjoyment for charterers.
Specifically, the Circular sets out the requirements, conditions, procedures, and responsibilities which both the charterer and the chartering company must follow when engaging in bareboat chartering within the RoC’s maritime jurisdiction. Chartering companies operating in Cyprus must stay well-informed about Circular and ensure their operations align with the stipulated guidelines. This includes maintaining their vessels to the highest standards, providing comprehensive safety briefings, and facilitating compliance with all regulations.
The pleasure vessels which are to operate under bareboat chartering in the RoC – regardless of their flag – must:
- has suitable accommodation;
- be available for a fee on the basis of a charterparty agreement;
- get in line with the customs clearance procedures – as a necessary prerequisite in order to engage in bareboat chartering and;
- belong to chartering companies, duly complied with TAX and VAT registries.
The vessel must meet the required safety standards and be appropriately insured. A person in charge for the Chartering Operations as well as an Assistant to that person must be assigned and both of them must hold the necessary navigation license for operating a pleasure vessel.
Application for bareboat chartering
Firstly, as per the Circular, the chartering company must submit an application to bareboat charter pleasure vessels to the DMS alongside with the relevant documents and the relevant fee. After the examination of the application, the DMS shall issue an Attestation for the operation of the chartering company with validity up to one year.
Locations permitted for bareboat chartering
The locations that the chartering of pleasure vessels for voyages within the territorial waters of the RoC, are set forth in the Circular. These includes the Marinas, berthing places of pleasure vessels, fishing shelters or ports of the RoC. However, a written Departure note must be submitted to the Marine Police Station before the departure of each vessel.
Safety Measures
The circular emphasizes the importance of ensuring the safety of charterers and the vessels themselves. This includes the presence on board of a quality management system certificate which includes the procedures for the smooth management of the pleasure vessel such as maintenance procedures, emergency procedures, vessel waste management procedures etc. Charterers are required to follow established navigation rules and guidelines, including designated anchorage areas and speed limits.
Maintenance of the pleasure vessel
The Circular prioritizes safety, ensuring that charterers have access to properly maintained vessels and are equipped with the necessary safety information. Regular inspections must be carried out and providing the charterers with proper safety briefings before setting sail. A possession of an Inspection Attestation must be in place on each vessel operate under bareboat chartering activity. However, for the issuance of the Inspection Attestation, the technical requirements for bareboat charter vessels set forth in Annex IV of the Circular must be met. After an inspection by the DMS, the relevant Attestation will be issued.
Skipper and crew under bareboat chartering
In this regard, the Circular sets forth crewing requirements, stipulating the designated skipper of a pleasure vessel under bareboat chartering must not belong neither have a direct relation to the chartering company. The skipper must hold the appropriate qualifications and experience for the safe and smooth operation of the voyage. Specifically, the skipper must hold a certificate – depending on the type and length of the pleasure vessel – proving his maritime training as a prerequisite for the smooth operation of the vessel.
Liability and Insurance
Both the pleasure vessel and the chartering company must be insured for liability against death, injury of passengers or third parties which may be caused by any marine accident such as sinking, collision or any other cause. Insurance must also cover liability for marine pollution as a measure to protect and preserve the marine ecosystem.
Benefits for the charterers
The Circular offers several benefits for those interested in bareboat chartering in Cyprus. There are clear guidelines as to the navigation of the bareboat chartering and clear regulations in place to protect the interest and safety of the charterers.
By adhering to waste disposal and environmental protection measures, charterers can contribute to the preservation of Cyprus’ marine ecosystems.
In Conclusion
The Circular marks a significant step in promoting responsible and enjoyable bareboat chartering activities in Cyprus. By fostering safety, environmental protection, and adherence to regulations, this Circular enhances the bareboat chartering experience, allowing charterers to explore the stunning coastline of Cyprus while adhering to the highest standards of maritime practice. As maritime tourism continues to grow, Circular paves the way for a sustainable and exciting journey for all who set sail in Cypriot waters.
Cyprus has one of the largest registered merchant fleets in the world, being at the same time a well-established shipping and ship management center, located close to the Suez Canal.
Cyprus Registry is also one of the only two open registries within the European Union, allowing 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, require.
The Cyprus flag offers many economic benefits such as the following:
- Low set-up and operating costs for companies;
- No registration and mortgage fees for ocean going vessels;
- Competitive yacht registration costs and fees;
- No registration duty is payable on the shares of as shipping company.
- Attractive and transparent Tonnage Tax System;
- There are not any restrictions in relation to the nationality of the seafarers;
- There are not tax profits from the operation or management of a vessel flying the Cyprus flag.
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Secure your future with Cyprus permanent residency by investment. Our dedicated Immigration Department is renowned for its swift, efficient, and meticulous approach, ensuring our clients receive top-tier, cost-effective services. Ready to make Cyprus your second home?
A Cyprus permanent residency by investment can be obtained by non-EU nationals who make significant investments in the country, in line with Regulation 6 (2) of the Aliens and Immigration Regulations. This investment should be a minimum of €300,000. The investment can be channeled into various sectors:
- Purchase of a NEW house or apartment from a property developer valued at least €300,000 (plus VAT). The funds for this investment should come from outside Cyprus.
- Investment in other types of real estate like offices, shops, or hotels, whether new or second-hand, worth at least €300,000. The funds can be sourced either from within or outside Cyprus.
- A minimum investment of €300,000 in the share capital of a Cyprus-based company that operates in the country, has a physical office and employs at least five people. The funds can be sourced from within or outside Cyprus.
- Investing at least €300,000 in Cyprus Collective Investment Funds securities (e.g., AIF, AIFLNP, RAIF). The funds can be from either inside or outside Cyprus.
On April 21st 2023, the Ministry of Interior introduced revised criteria effective from May 2nd for granting this specific immigration permit. The aim is to institutionalize a mechanism to monitor investors receiving citizenship. This move is designed to address vulnerabilities observed in the Cyprus permanent residency policy over the years. The new criteria set more stringent investment and quality standards, emphasizing rigorous checks for granting an immigration permit and establishing verification mechanisms.
Notably, the revised criteria specify that an investment of €300,000 no longer guarantees an Immigration permit for non-dependent adult family members. Only unmarried children aged 18 to 25 qualify, provided they meet certain conditions (like university enrollment). This means a single investment won’t grant citizenship to parents, in-laws, or adult children.
Under the updated PR policy, the investment amount remains unchanged, but there’s a new mechanism to ensure the investment is retained. Additionally, the income requirements have been adjusted. Annually, applicants must prove they maintain the initial investment and the stipulated income for themselves and their families. The income requirement for each applicant is now €50,000 (previously €30,000), €10,000 for each minor child (previously €5,000), and €15,000 for spouses. If an immigration permit holder fails to provide the necessary documentation, their permit and that of their family will be revoked.
These changes reflect the Cyprus Government’s objective to ensure foreign investors retain the investments that qualified them for permanent residence in Cyprus.
Mortgages on vessels are a common practice in the maritime/shipping industry and can be an effective way for shipowners to obtain financing for their vessels. Cyprus, as a popular maritime nation, has a well-established legal framework for mortgages on vessels, which provides both lenders and borrowers with a clear set of rules and regulations to follow.
The Legal Framework
The legal framework which governs mortgages on vessels in Cyprus is the Cyprus Merchant Shipping (Registration of Ships, Sales and Mortgages) Law of 1963. Several amendments of this particular law have been made from time to time in order to keep up with the changing needs of the shipping industry and to ensure that the legal framework remains updated.
The procedure for registering a mortgage on a vessel in Cyprus
In accordance with the abovementioned law, a mortgage on a vessel can be created by way of a registered instrument. The mortgage must be registered with the Registrar of Cyprus Ships, and the mortgagee must be a person or entity that is entitled to hold a mortgage under the Cyprus law. The mortgagee must also have the right to enforce the mortgage in Cyprus. If the mortgagee is a Cypriot company and/or entity, the mortgage will also have to be registered with the Registrar of Companies on the first 42 days of its registration.
The mortgage instrument must be in writing and signed by both the mortgagor and the mortgagee. It must also contain certain mandatory provisions, including a description of the vessel, the amount of the mortgage, the interest rate, the repayment terms, and the conditions under which the mortgagee can enforce the mortgage. If the mortgagor defaults on the repayment of the mortgage, the mortgagee can enforce the mortgage in accordance with the provisions of the law. The mortgagee has the right to arrest the vessel, and it can seek a court order to sell the vessel in order to recover the outstanding debt.
In this respect, according to the Deputy Ministry of Shipping (DMS) in Cyprus, the documents required for the registration of a mortgage on a vessel are the following:
- Written Application by a local lawyer together with €30 Advocate stamps.
- Resolutions of Directors on behalf of the Shipowners.
- Duly executed Power of Attorney on behalf of the Shipowners.
- Mortgage and Deed of Covenants (duly executed).
- Certificate of Directors and Secretary (in case of Cyprus registered Company).
- Incumbency Certificate duly executed (in case of foreign registered Company’s).
The advantages of registering a mortgage on a vessel in Cyprus
There are of course several advantages to both shipowners and lenders if a mortgage is registered on a vessel under the flag of Cyprus. One of the main advantages is that Cyprus is a well-respected maritime nation, with a long history of maritime trade and shipping. This means that mortgages on vessels in Cyprus are generally viewed as secure investments, which can help to attract lenders and keep interest rates low. Another advantage is that mortgages on vessels in Cyprus are relatively easy to obtain, provided that the borrower meets the necessary requirements. This can be particularly beneficial for small and medium-sized shipowners who may struggle to obtain financing from traditional lenders.
Conclusion
In conclusion, mortgages on vessels in Cyprus provide a secure and reliable way for shipowners to obtain financing for their vessels. The legal framework in Cyprus is well-established and provides both lenders and borrowers with a clear set of rules and regulations to follow. Shipowners and lenders considering mortgages on vessels in Cyprus should consult with a maritime lawyer to ensure that they understand the legal requirements and obligations associated with this type of financing.
