New Proposed Tonnage Tax scheme for Cyprus pre-cleared by the European Commission

The European Commission has approved a proposal by the Cypriot Maritime Administration for a special reduced flat tax (“Tonnage Tax”) for companies engaged in international maritime transport, aimed at benefiting Shipowners, Shipmangers offering Technical and/or Crew management services, and Charterers.

Whilst Cyprus has had similar legislation in place and a Tonnage Tax scheme since 1963, the proposed legislation, which is in line with EU state aid rules, is expected to be much wider in scope, and is timetabled to become Law within the next couple of months.

Through the new scheme it is proposed that various shipping activities of Shipowners, Shipmangers, and Charterers shall eligible to be taxed under the “Tonnage Tax”, assessed by reference to the tonnage of the vessel(s) – notional profit, within the ownership, management or chartership of such companies.

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