Cyprus’s Tonnage Tax System (TTS) is one of the main reasons why the country is a leading maritime hub. This unique tax structure offers considerable financial benefits to shipping companies.
How the Cyprus Tonnage Tax System Works:
- Tax Based on Vessel Tonnage: Unlike traditional corporate tax models, the Cyprus TTS taxes shipowners based on the tonnage of their fleet, rather than the company’s actual profits. This can result in lower tax liabilities, especially for larger vessels and fleets.
- Wide Eligibility: The TTS applies not only to shipowners but also to charterers and ship managers. This broad application makes it a versatile option for different types of shipping businesses.
- No Double Taxation: Cyprus has a wide network of double taxation treaties with over 60 countries. This ensures that shipowners are not taxed twice on the same income, making it highly attractive for international shipping companies.
- Exemptions from Income Tax: Under the Tonnage Tax System, profits from the operation of qualifying ships are exempt from corporate income tax. Additionally, there are no withholding taxes on dividends paid out of shipping profits.
Conclusion:
The Cyprus Tonnage Tax System provides substantial tax relief for shipowners, charterers, and ship managers, making Cyprus one of the most financially advantageous jurisdictions for shipping companies.
Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice.
