Yacht registration

Legislation

Yacht registration in Cyprus is regulated by the Merchant Shipping (Registration of Ships, Sales and Mortgages) Law of 1963, as amended from time to time. The Law does not make a special reference to yachts as such, but to small vessels or recreational crafts. In accordance with this legislation recreational crafts may be registered in the Register of Cyprus Ships. These vessels are permitted to sail in both national and international waters.

Recreational crafts may also be registered in the Register of Small Vessels according to the provisions of the Emergency Powers (Control of Small Vessels) Regulations of 1955. These vessels are only permitted to sail in Cyprus territorial waters.

 

Registration

The main types of vessel registration in Cyprus are Provisional, Permanent and Parallel registration.

In order to enable the Registrar of Cyprus Ships to initiate the procedure for the provisional registration of a ship, the following information is required:
•    Name of the vessel and flag of registry at the time of the application
•    Name of the applicant registering the vessel
•    Name under which the vessel will be registered
•    Fully particulars of the vessel (type, year of build, gross and net tonnage)
•    Name of the classification society
•    Declaration of particulars of the company for the ISM Code
•    The operating/trading area of the vessel
•    Vessel location at the time of her provisional registration
•    Name and address of the shareholders and directors of the vessel owning company

For permanent registration the following supplementary documents must be submitted to the Registrar of Cyprus Ships in addition to the documents required for the provisional registration:
•    Certificate of Survey and Tonnage Certificate
•    Ship's Carving and Marking Note
•    The International Certificates from a recognised Classification Society
•    Safety Management Certificate

 

Leasing Scheme

In March 2012, the Cyprus VAT department issued new guidelines through the issuance of V.A.T. circular 163, introducing an advantageous leasing scheme for pleasure yachts in Cyprus. Now the V.A.T. circular 163 regulating the yacht lease has been updated by the V.A.T. circular 181 of January 2014.

The new scheme allows yacht owners significant tax savings on the lease payments and the final purchase price if they opt to purchase the yacht at the end of the lease agreement.  With this scheme the effective VAT rate can be reduced to as low as 3.4% of the initial value of a yacht and the lease may run over a maximum 4 year period thus allowing a lower lease repayment.

To benefit from the scheme the following requirements must be fulfilled:
•    The lessor must be a Cypriot registered company and registered for local VAT. There are no restrictions as for the residency of the lessee.
•    The yacht should sail in Cyprus within one month of the date of the lease agreement. In case an extension is needed, this should be agreed with the Commissioner of VAT prior to the commencement of the scheme.
•    The lessee must pay the lessor an initial contribution of at least 40% of the yacht's value.
•    The lease payments are payable on a monthly basis and the duration of the lease cannot exceed 48 months. The minimum lease period is three months.
•    The lessor is expected to have a profit on the lease agreement of no less than 10% of the yachts initial cost.
•    Prior to the commencement of the scheme the lessor should obtain a written approval from the Cyprus VAT authority that the company is entitled to participate in the scheme. In order for such a permission to be granted the lessor must file the lease agreement and the relevant paperwork showing evidence of the value of the yacht.

 

If you would like to register a yacht in Cyprus or simply obtain advice on the different types of registration feel free to contact us. We will undertake all the relevant procedures and communications with the relevant authorities.