The risks to Cypriot shipping from Brexit seem to be minimal. British companies are in the process of registering ships to the Cypriot registry and other companies have moved their headquarters to the island. On a broader level, Brexit will affect shipping companies’ income and trade, but Cypriot shipping has not been affected negatively, for the time being.
From 1 January 2021, British vessels are no longer considered part of the EU fleet. In addition, British shipping companies are no longer considered European and therefore cannot fit into the Cyprus Tonnage Tax System unless they make the necessary changes to be considered European. The Shipping Deputy Ministry to prevent the deletion of vessels from its registry, contacted and informed the affected parties to make their own preparations for the UK’s withdrawal from the European Union, providing them with options. British nationals and companies that owned Cypriot-registered vessels, in order for them to continue to have their vessels registered under the Cyprus flag, had the following options:
a) to transfer the ownership of their vessels to a person who, by virtue of Section 5 of the Cyprus Merchant Shipping Law, is qualified to own a Cypriot ship;
b) to transfer the shares or change the directors of the registered owning company so that, by virtue of Section 5(4) of the Law, the registered owners will be deemed to be controlled by citizens of the European Union or the European Economic Area; and
c) to transfer the registered office of the current registered owning company (re-domicilisation) to the Republic of Cyprus (by virtue of Sections 354A to 354H of the Companies Law, Chapter 113) or to any other EU or EEA member state.
It is interesting to mention that the vast majority of British shipowners transferred the ownership of their vessels to newly incorporated Cypriot legal entities. More specifically, the British owners proceeded with the establishment of Cypriot entities in the island, in order for them to remain eligible to own Cypriot-registered vessels. It is of great importance that, for the time being, no vessel has been deleted from the Cypriot Registry as a result of Brexit.
Author: Zacharias L. Kapsis