Income derived from the rendering of ship management services is subject to tax at the rate of 12.5%.
The rendering of ship management services to ships allows a company the option to:
- Be taxed on its profits at the rate of 12,5%, or
- Pay Tonnage tax at 25% of the rate applicable to ship owners and charterers for the qualifying ships under management link to , provided it satisfies certain criteria:
- the maintenance of a fully fledged office in Cyprus, and
- the employment of a sufficient number of qualified personnel (51% of whom should be EU/EEA citizens) and
- at least 2/3 of the management is entirely carried out from the territory of the EU/EEA. Further, and
- a share of his fleet must be comprised of EU flag ships, which share must not be reduced in the three-year period following the exercise of the option (flag-share requirement).
All ships and crews under management must comply with relevant international standards, in particular those relating to maritime security, safety, training and certification of seafarers, environmental performance and on-board working conditions.
The term Ship Management Services includes recruitment of crew, crew management services, as well as services relating to technical and financial management of the ship, under certain conditions. A ship manager who provides commercial management services will not be considered a qualifying ship manager and his income will be subject to income tax.
A ship manager who has opted for the Tonnage tax system must remain under this system for at least 10 years. Early withdrawal will result in penalties.
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