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A Maritime Tradition Spanning Millennia
The history of the Sea and Shipping in Cyprus traces back thousands of years. The island’s expert knowledge of sailing and trading was acquired through the many civilisations that conquered Cyprus in the ancient years, such as the Egyptians, Greeks, Romans, French, Venetians and British. Cyprus’s constant striving for perfection in the field of merchant shipping has also been naturally facilitated by its almost ideal geographic location, which is at the crossroads of three continents, Europe, Asia and Africa.
Economic Transformation After Independence
After the independence of Cyprus in 1960, the country’s economy witnessed an upsurge with the modernisation of all business and commercial sectors. Consequently, the role of Cyprus as an international centre for business and commerce has evolved considerably and was stimulated by increased trade, a growth of offshore activities, and the rapid expansion of the economy of Cyprus. During that period a number of external factors that contributed in the establishment of Cyprus as a strategic and significant international business centre were the re-opening of the Suez Canal, the growing importance of the Arab oil in the global economy and the enhancement of the Middle East as a prosperous financial region.
Early Recognition of Shipping’s Strategic Importance
Cyprus recognised, as early as 1963, the political, economic and social importance of shipping. Since then, Cyprus managed to attract shipping entrepreneurs and to develop the country into a fully-fledged shipping centre combining both a sovereign flag and a resident shipping industry, which is renowned for its high quality services and standards of safety.
Building a Strong Maritime Infrastructure
The extension and diversification of all possible avenues of shipping activity in Cyprus is to a large extend attributed to the country’s excellent shipping infrastructure, which has developed through the years by the Maritime Administration (the Ministry of Transport, Communications and Works, the Department of Merchant Shipping and the Cyprus Ports Authority and since 2018 the autonomous specialised Shipping Deputy Ministry) and the Cyprus Shipping Industry, which is represented by the Cyprus Shipping Chamber. All services, both public and private, which shipowners and investors require are not only well represented and organised, but also work to the highest quality standards.
A Stable and Professional Business Environment
Cyprus, combines a legal system closely modelled on its British counterpart, an efficient civil service, good labour relations, an outstandingly high level of professionalism in the legal and accounting sectors, an excellent banking system, state of the art telecommunications and air links to all important destinations, that form solid foundations for entrepreneurs to set up their business.
Competitive Fiscal and Economic Incentives
A number of fiscal and economic incentives are also available, such as competitive ship registration costs and annual tonnage tax, an EU approved favourable and very competitive tax regime for shipowning, shipmanagement, and chartering companies and a competitive corporation tax for other international business enterprises, availability of competent local employees and comparatively low operation costs, which prompted many European and other entrepreneurs to establish local companies with fully fledged offices in Cyprus.
Today, the Cyprus Registry is classified as the 14th largest merchant fleet globally and the 5th largest fleet in the European Union. The Cyprus Registry is continuously upgrading its services in order to offer a high standard of support to its flag users and maintain its reputation as a “Flag of Progress and Quality”.
Limassol: A Global Shipmanagement Hub
Cyprus, and more particularly Limassol, is considered to be the largest third party shipmanagement centre in the European Union, and one of the largest in the world. A large number of shipowning, shipmanagement, chartering and shipping related companies maintain fully-fledged offices and conduct their international activities from Cyprus. The vast majority of these companies are located in Limassol and are Members of the Cyprus Shipping Chamber. Some of the largest shipmanagement companies in the world have their headquarters and conduct their operations from Limassol. It is estimated that approximately 4% of the world’s fleet is managed from Cyprus. Among the shipowning and shipmanagement companies established and operating from Cyprus, 90% are controlled by EU, including Cypriot interests.
A Complete Maritime Services Cluster
Companies engaged in chartering, crewing, ship surveying, shipbroking, salvaging and marine insurance, are able to offer first class services to their customers worldwide from their offices in Cyprus. In addition, competent and reputable shipping agents, efficient clearing and forwarding agents as well as top class ship chandlers, freight forwarders, travel agents and other shipping related companies are located in Cyprus.
The official approval by the European Commission in 2010 of the revised and upgraded Cyprus Shipping Taxation System constitutes perhaps the most important success for Cyprus Shipping since the formation of the Republic of Cyprus and ensures the viability of the Cyprus Shipping Register and the Cyprus Shipping Industry. With the new Taxation System, Cyprus is now able to cover in their most modern form, the three basic Shipping activities that are offered today in International Shipping, namely Shipowning, Shipmanagement and the Chartering of vessels.
The “Tonnage Tax” System is in its own right, an innovative and a pioneering piece of legislation, which updates existing and offers additional financial incentives to shipping activities in Cyprus, in full compliance with the relevant EU shipping taxation framework. It contains most of the favourable features found in tonnage tax systems of other traditional EU maritime countries, providing Cyprus with a competitive advantage. It extends the favourable benefits applicable to owners of Cyprus flag vessels and shipmanagers, to owners of foreign flag vessels and charterers. It also extends the tax benefits that previously only covered profits from the operation of vessels in shipping activities, to cover profits from the sale of vessels, interest earned on funds used other than for investment purposes and dividends paid directly or indirectly from shipping related profits.
What really makes the Cyprus shipping tax incentives even more appealing is the fact that, with this approval by the European Union, Cyprus has in effect become the only “EU approved Open Registry”. This simply means, any EU and more importantly, Non-EU, ship operator may benefit from this very competitive shipping taxation system and also be able to have a quality EU flag on their ships. Furthermore, by setting up therefore, a shipping company tax resident in Cyprus and having a Cyprus flag ship either owned, managed or chartered, then the whole set of shipping companies based in third countries (non-EU flag ships) can also enter the new Cyprus competitive tonnage tax regime.
A Key Pillar of the National Economy
Merchant shipping makes a significant contribution to the economy of Cyprus. Over the years, the sector has enabled the country to achieve remarkable international recognition and rankings far beyond its geographical size.
The Government of Cyprus has long recognised the strategic importance of shipping, which has developed into one of the island’s most dynamic and internationally competitive industries.
Significant Contribution to GDP
According to the most recent official statistical data published by the Central Bank of Cyprus, the shipping sector contributes approximately 7% to the country’s Gross Domestic Product (GDP).
However, findings from studies commissioned by the Government of Cyprus for the development of a National Shipping Policy indicate that the overall contribution of the shipping sector to the Cyprus economy may be even higher than originally estimated, based on data from the Statistical Service of Cyprus.
Employment and Global Workforce
The Cyprus Shipping Industry also plays an important role in providing employment opportunities. Approximately 9,000 people are employed ashore in Cyprus by shipping companies.
In addition, shipping companies based in Cyprus employ an estimated 80,000 seafarers of various nationalities onboard vessels that are controlled or managed from the island. Many of these companies are Members of the Cyprus Shipping Chamber.
A Milestone for Cyprus Shipping
One of the long-standing priorities of the Cyprus Shipping Chamber was the creation of an autonomous Shipping Deputy Ministry. This proposal was unanimously approved by the House of Representatives on 14 July 2017.
Modernising the Maritime Administration
On 1 March 2018, the Shipping Industry welcomed the commencement of the Shipping Deputy Ministry, which constituted a “historic” moment for Cyprus Shipping. Since its establishment in March 2018, the Shipping Deputy Ministry has progressed with regard to the restructuring of the previously Department of Merchant Shipping, aiming to make the Cyprus Maritime Administration even more modern, efficient and industry-focused, and thus, even more business friendly to Cyprus-related Shipping companies.
Strong Political Support for Shipping
The unanimous approval of the Bill sent a clear message of political support for shipping, one of the most productive sectors of the Cypriot economy.
It also empowered Cyprus to implement strategic development plans that respond to the evolving demands of the global economy and international competition.
Strategic Location at the Heart of the Mediterranean
Cyprus is strategically located in the north-eastern corner of the Mediterranean, at the intersection of major international and regional shipping lanes. This prime location makes its ports a natural choice for vessels entering or leaving the Mediterranean.
Despite the relatively small size of Cyprus’ external trade, approximately 100 different shipping lines serve the island regularly, providing frequent connections worldwide.
Modern and Integrated Port System
Seaborne traffic is served by a modern, highly integrated national port system, including:
Limassol and Larnaca: New multipurpose ports
Vassiliko: Industrial port
Larnaca, Dhekelia, and Moni: Specialized oil terminals
All ports are under the Cyprus Ports Authority (CPA), an autonomous public organization responsible for planning, managing, and operating the island’s port facilities.
With all major ports located within 40 nautical miles of each other, Cyprus’ ports complement one another, effectively functioning as one larger port. Together, they handle all types of cargo, local and transit traffic, and support both domestic and international shipping requirements.
Cyprus serves as a hub for Europe-Far East trade and provides easy access to shipping markets in the Levant, North Adriatic, and Black Sea, with minimal deviation from major shipping routes.
The island is also a hub for inter-regional maritime traffic and other main-line deep-sea trades traversing the Mediterranean.
Cyprus as a Cruise Centre
In recent years, Cyprus has become a major cruise centre in the Eastern Mediterranean. The island serves as a home base for modern cruise ships, offering excursions for tourists and locals for at least nine months each year.
Maritime Labour Convention 2006
On 26 April 2012, Cyprus ratified the Maritime Labour Convention (MLC) 2006, becoming the 26th member state of the ILO to do so.
The ratification ensured:
Compliance of ships flying the Cyprus flag with international labour standards
Regular inspections, reporting, and legal enforcement
Ships carry a Maritime Labour Certificate and a Declaration of Maritime Labour Compliance
