Cyprus’ EU membership coupled with its open registry and low ship registration costs, show why it is a prime destination for ship management companies.

Ship management revenues increased to €421 million during the second half of 2014, highlighting the enduring strength of the sector in Cyprus and its global competitiveness. As the 10th biggest registry in the world, and number three in the EU, Cyprus has the numbers behind it, along with the staff and expertise necessary to serve the industry well, so with an eye on future growth there is a drive to create new synergies.

The reasons for Cyprus’ success with the industry are the numerous competitive advantages and opportunities offered by the Cypriot Merchant Shipping Legislation and, more specifically, the advantageous tax regime. Coupled with a strategic geographic location and a proliferation of world-class professional services available on the island, the reasons behind the remarkable growth of the Cyprus shipping registry become apparent.

The highlights of the legislation are the tonnage tax system based on net tonnage, which is open to ship management companies as well as owners, the islands 12.5% corporation tax rate, and the lack of taxation on profits from the technical and/or crew management of a qualifying vessel (Cyprus/ EU/EEA) or on dividends or on interest income.

The procedure is very straightforward and this can be achieved by either establishing a new company or by transferring it to Cyprus.

Andreas Hadjipetrou, Managing Director, Columbia Shipmanagement Ltd, explains, “Cyprus provides stability and an affordable workforce for all support services. At the same time, there are law firms, accounting firms and banks that are able to provide the necessary expertise.

“The government, the Ministry, and the Department of Merchant Shipping (DMS) as well as the Chamber are very supportive of new companies coming to the island. We welcome new players in the market. While there is a competitive environment here, our industry competes globally. The more companies that are present here, the more suppliers are here, the more industry visitors are on the island, the more attractive the island is for foreign investment and so on. We grow as a cluster.”

Marios Demetriades, Minister of Transport, Communications and Works, explains that the jurisdiction is still popular within the sector, and his department is working on all angles to keep it that way.

“20% of the world’s ship management takes place in Cyprus. If you compare Cyprus to other registries, there are some countries that only have a large registry, whereas Cyprus also has a shipping community, which is an important distinction. Shipping in Cyprus employs around 4,500 people on the ground, and on the ships registered under our flag there are about 50,000 seafarers, so the sector contributes significantly to our economy both directly and indirectly,” Demetriades concludes.

As Themis Papadopoulos, CEO of Interorient explains, the Ministry of Transport, Communications and Works is fully behind the sector, always looking for ways in increase the number of companies operating on the island, which is good for business because as the old adage goes, more is always better. “The Ministry has a fantastic idea, which is to transform the DMS into a one-stop shop. If I am a shipping company and I know I am going to Cyprus, having to deal with only one department which can take care of not just my ship registrations, but taxation issues and permits, all these kinds of things in one place, that is very attractive.

“Currently you have to deal with one department for this and another department for that, a ministry here and a ministry there, so if they can pull this off it will be a big boost. Ship owners have their own ancillary services that they drag along with them, so if we get 10 serious ship owners to come to Cyprus, you get those ancillary services coming with them, and Cyprus would then become a more complete maritime centre, with more commercial activity than there is now.”

Sentiments that are music to the ears of Demetriades, who is working tirelessly with his Ministry to boost growth in the sector and make it truly sustainable. “Beyond efficiency, our strategy is to become more active in the promotion of the shipping sector in Cyprus,” he explains. “We want to tell everybody that Cyprus is back to business as usual. We have all the characteristics to offer high quality services, we have an excellent business environment for you to operate from. We want to make sure the world knows about it.”