Cyprus Tonnage Tax System (Law 44(I)/2010)

 

After the recent issuance of the Circular 44/4012 and 45/2012, the Department of Merchant Shipping clarified the application of the tonnage tax system.

 

Taxation of Owners of Yachts and Pleasure Craft registered in the Register of Cyprus Ships

That is to say under the Circular 44/2012, the owners of yachts or pleasure crafts, registered in the Cyprus Register of Ships will not be required to submit Income tax return to the Inland Revenue Department, even though they are deemed to be non-qualifying owners, provided that the only asset owned by these persons is the above yacht or pleasure craft and provided, that it is not used for any other purpose rather than for the exclusive use/ recreational pleasure of the owner of the company.

 

Alternatively, if the yacht or pleasure craft is used either wholly or partially for commercial purposes, the owner must submit income tax returns and tax computations to the Inland Revenue Department and will be taxed accordingly.

 

 

Submission of income tax returns for the period before 31/12/2009

 

It was noted that the Inland Revenue Department was requiring from some shipping companies to submit income tax returns for the period up to the year ended December 31 2009.

In such cases where the registered owners and registered bareboat charterers of Cyprus ships earning income from the operation of such ships or ship management companies earning income from the provision of ship management services, who have received such income tax notification, are required to apply to the Department of Merchant Shipping in order to issue a tax clearance certificate.

On presentation of this certificate, they will be released from the obligation to submit income tax returns, provided that they have no other sources of income.

Areti Charidemou & Associates LLC Law Firm