The New Tonnage Tax system for Cyprus merchant shipping was approved by the European Commission on the 24th of March 2010 (Case N.37/2010), as compatible with the requirements of the EU acquis in accordance with the relevant guidelines on State Aid to Maritime Transport.

This simplified tonnage tax system is approved for the first time for an EU Member State, a State with an open registry.

It extends the favourable benefits applicable to owners of Cyprus flag vessels and ship managers to owners of foreign flag vessels and charterers.

It also extends the tax benefits that previously covered only profits from the operation of vessels in shipping activities, to cover profits on the sale of vessels, interest earned on funds used other than for investment purposes and dividends paid directly or indirectly from shipping related profits.

The Merchant Shipping (Fees & Taxing Provisions) Law was wenacted in May 2010 and introduces a new tonnage tax system in Cyprus, applicable as from the fiscal year 2010.

The new tonnage tax system contains most of the favourable features found in tonnage tax systems in other EU countries, and more. The system, therefore, provides Cyprus with a competitive advantage and is expected to significantly contribute to the improvement of the already strong position of the country in the shipping world.

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