FORMATION OF CYPRUS IBC (OFFSHORE)
SHIPPING COMPANIES

Taxation of Shipping Companies

Shipping companies are virtually exempt from any type of tax. Furthermore, International business shipping companies and their foreign employees are entitled to maintain foreign currency accounts and may transfer their income abroad after payment of all necessary taxes.

• they pay no income tax on profits or dividends;
• they pay no estate duty;
• no capital gain is considered to arise from the sale or transfer of ownership of any ship or shares in a shipping company;
• emoluments of seamen employed on board Cyprus ships are exempt from tax;
• dividends distributed to shareholders of offshore ship management companies attract no tax;
• seamen employed by Cyprus international business ship management companies on board foreign flag ships or in respect of services on board Cyprus flag ships managed by them pay no tax in respect of emoluments received by them. To qualify for tax exemption in respect of foreign flag ships, the emoluments must be paid through a bank operating in Cyprus.
• foreign employees of international business shipping companies who derive their income from outside Cyprus are taxed at 10% of the normal tax rates applicable in Cyprus. If they receive their emoluments in Cyprus then they are totally exempt from tax.
• foreign employees of international business shipping companies who work within Cyprus, are taxed at half the rate of tax.

With regards to a ship sailing under the Cyprus flag, it is exempt from tax in respect of all profits, dividends, capital gains tax and estate duty arising from shipping activities.