As of the 15th June 2012 the Cypriot House of Representatives approved and enforced the Protection of Cyprus Flag Ships from Acts of Piracy and other Unlawful Acts Law 77(I) 2012, hereinafter referred to as “the Law”, which complements the ISPS Code, implemented through the addition of Chapter XI-2 of SOLAS which Cyprus ratified in 1984.
The ISPS Code
The ISPS Code applies to any ship on international waters of 500GT or more and also ports serving such ships. The main objectives of the ISPS Code are:
- To detect security threats and implement security measures;
- To establish roles and responsibilities concerning maritime security for governments, local administrations, ship and port industries at the national and international level;
- To provide and promote security related information to concerned parties;
- To provide a methodology for security assessments so as to have in place plans and procedures to react to changing security levels;
The effect of the Law
The Law provides the requisite legal guidelines for Shipowners, Bareboat charterers and Ship-managers with regards to measures they need to implement for a passage through the High Risk Areas ( “HRA”), how they can engage the services of a Private Ship Security Company, (“PSSC”) for a transit through the HRA as well as the procedure that a PSSC needs to adhere to prior to acquiring a licence to provide such services on board Cyprus flagged vessels.
The Law also provides that only PSSCs who are certified to provide security related services on board Cyprus flagged vessels are allowed to embark security guards and weapons for such transits through the HRA. A complete, updated, list of the approved PSSC’s can be found online at the Cyprus Department of Merchant Shipping website at: http://www.mcw.gov.cy.
Applicable geographical area
It is worth noting that the Law has a global geographical application and each person on board the vessel is bound by the laws of Cyprus regardless of the fact that the vessel might be transiting on International waters. For ease of reference the First Schedule of the Law provides the coordinates and defines the High Risk Areas.
Obligations to inform upon entering a HRA
It is an obligation of the master to register with the Maritime Security Centre for the Horn of Africa (MSCHOA) and report to the United Kingdome Marine Trade Operations (UKMTO) to be monitored regarding any incidents during a transit through the HRA. This means that any event which might be construed as an unlawful act or attempted unlawful act needs to be transmitted for further investigation. The Law also allows the master and crew to arrest any person who boards or attempts to board the vessel to commit any unlawful act.
Obligations regarding services of PSSC and weapons
The engagement of a PSSCs is effected through with a written agreement between Shipowner/Charterer or Manager and the PSSC. (usually with a GUARDCON or amended form of it) The Master has the obligation to supervise the implementation of the agreement. The storage of firearms must be done in such a way as no other person on board has access apart from the PSSC when that is deemed necessary and when in the HRA.
Approval of a PSSC under Cyprus flag
This can be done for any PSSC which is incorporated under the laws of Cyprus or has a legal representative in Cyprus. It is a criminal offence for a PSSC to embark guards or weapons on board a Cyprus flagged vessel without being authorised to do so. If the PSSC is a company that has its registered office central administration or principal place of business in another country an authorised representative must be appointed in Cyprus. An authorised representative can be a citizen or a resident of Cyprus as per the Income Tax Laws of 2002 to Law (No.2) of 2011. This encapsulates both partnerships or companies incorporated under the laws of Cyprus provided they conduct business operations in Cyprus and employ permanent personnel in Cyprus. The authorised representative is only required when the Private Ship Security Company has its registered office, central administration or its principal place of business is in another country.
Christodoulos G. Vassiliades & CO LLC has published Cyprus Tax Facts for 2016. The publication consists of:
- Corporation Tax;
- Special Contribution of Defence Fund;
- Capital Gains Tax;
- Personal Income Tax;
- Social Insurance;
- Value Added Tax;
- Immovable Property Tax;
- Transfer Fees by the Land Registry Department;
- Stamp & Capital Duties;
- Double Taxation Agreement;
- Tax Calendar; and
- Penalty Notes.
For further details, read below full publication
The growth in the Ship Management revenues to €464 million for the first half of 2015 demonstrates the enduring strength of this sector in Cyprus, corresponding to 5,4% of Cyprus’ GDP, as well as its global competiveness.
The simplicity in the procedures of the Cyprus Ship Registry, the strategic geographic location of the island, in combination with the world-class professional services available, and the Tonnage Tax system applicable, make Cyprus an ideal location for ship management companies.
Under the Tonnage Tax System a ship manager who opts to be taxed under the system and is accepted to be taxed as so, is subject to an annual tax calculated based on the net tonnage of the qualifying vessels managed by the said ship manager. The Cyprus TT system is the only one approved in the EU and is rightly considered the biggest advantage for ship management companies on the island. It is hence not without reason that 20% of the world’s ship management is taking place in Cyprus. The number of ship management companies registered under the tonnage tax system demonstrates a constant yearly increase, noting 37 ship management companies under the TT system in 2015.
Any Ship manager, who is Cyprus tax resident, who provides crew and/or technical ship management services to a qualifying ship engaged in a qualifying activity, may opt to be taxed under the TT system, provided the following criteria are satisfied:
- Maintenance of a fully fledged office in Cyprus;
- Employment of a sufficient in number and qualification personnel, at least 51% being EU/ EEA citizens;
- 2/3 of the management being carried out from EU/EEA territory;
- Compliance with certain international standards (maritime security, safety, training, certification of seafarers, environmental issues, on-board working conditions, full implementation of the Maritime Labour Convention) etc;
- At least 60% of the fleet managed, in terms of tonnage, comprising of Community ships (maintaining the said percentage for a period of three years, subject to further exceptions);
- Tonnage Tax calculation:
- Once opting to use the TT system, one must stay within the system for a period of ten years; if withdrawing prematurely, then the difference between the amount paid during the period the ship owner was under the TT system and the amount that would have been paid had it been subject to corporation tax during that period, will need to be paid.
|UNITS OF NET TONNAGE
||€TT PER 400 UNITS
- Profits from the provision of crew and/or technical ship management services to any qualifying ship
- Dividend paid directly or indirectly from the above
- Interest earned on funds used as working capital or for the payment of expenses arising related to the management of the ships, excluding interest on capital used for investments
Christodoulos G. Vassiliades & Co. LLC offers legal and administrative services to ship management companies wishing to bring their business to Cyprus from a – z ; from the searching, finding and setting up of an office, to the finding and hiring of the office personnel, to the application for the TT system; ensuring full compliance with the Cyprus legislation and regulations at all times.
 Meaning a sea going vessel (including vessels that transport humanitarian aid) has been certified in accordance with international principles and legislation of the flag country and that is registered in the register of a member country of the International Maritime Organization / the International Labour Organization.
 for ship managers, means services provided to a ship owner or bareboat charterer on the basis of a written agreement in relation to crew and/or technical management and/or both
Maria Ch. Kyriacou of Christodoulos G. Vassiliades & Co. LLC contributed to the publication Cartels: Enforcement, Appeals & Damages Actions on Global Legal Insights.
The article deals with the following topics:
- Overview of the law and enforcement regime relating to cartels
- Overview of investigative powers in Cyprus
- Overview of cartel enforcement activity during the last 12 months
- Key issues in relation to enforcement policy
- Key issues in relation to investigation and decision-making procedures
- Leniency/amnesty regime
- Administrative settlement of cases
- Third party complaints
- Civil penalties and sanctions
- Right of appeal against civil liability and penalties
- Criminal sanctions
- Cross-border issues
- Developments in private enforcement of antitrust laws
- Reform proposals
Read Full Article
Undertakings for Collective Investment in Transferable Securities (UCITS) are (mainly) retail investment funds regulated at European Union (EU) level. Following the adoption of the first relevant EU (European Economic Community at that time) Directive in 1985, UCITS have established themselves during the course of time, as a reputed retail investment product both within as well as outside the EU. The first UCITS Directive of 1985 (85/611/EEC) has been repealed in 2009 by the so called UCITS IV Directive (2009/65/EC), whereas amendments had taken place in the meantime, e.g. as to the eligible assets, in which a UCITS may invest.
The UCITS IV Directive has been transposed into Cypriot Law by Law 78 of 2012 on Open Ended Undertakings for Collective Investment as amended (UCI Law). As to the current state of things, the UCI Law will have to undergo significant amendments by March 2016. The reason is that an EU Directive amending the UCITS IV Directive, the so called UCITS V Directive (2014/91/EU), will be entering into effect at that time and will subsequently have to be transposed into Cypriot law by then.
Regarding regulation and supervision of UCITS in Cyprus the competent authority therefore, including the imposition of administrative sanctions, is the Cyprus Securities and Exchange Commission (CySEC).
A widely used tool for securing the repayment of a loan or any other financial obligation of shipping companies towards their creditors is the creation of a mortgage over a ship in favor of the said creditor.
The concept behind the amendments brought by Law 88 of 2015
Law 78 of 2012 on Open-Ended Undertakings for Collective Investment (UCI Law) transposed into Cypriot Law the European Union (EU) UCITS IV Directive (2009/65/EC) on undertakings for collective investment in transferable securities (UCITS). The competent authority for regulation and supervision of UCITS in Cyprus is the Cyprus Securities and Exchange Commission (CySEC).
The UCI Law can be considered as the piece of legislation marking Cyprus’ efforts to emerge into an investment funds jurisdiction, having regard to the interest that the draft UCI Law had attracted during the consultation process.
The UCI Law has been amended for the first time earlier this year by Law 88 of 2015. The amendments so effected can be classified into following categories:
- Amendments for the purpose of enhancing the competitiveness of Cypriot UCITS, e.g. by no longer requiring that all Cypriot UCITS calculate and publish their net asset value (NAV) daily without taking any distinguishing factor into consideration; or by replacing the requirement for mandatory publications in two local newspapers with the requirement to provide relevant information to investors through a durable medium and through a relevant publication on the management company’s/investment company’s website (as applicable);
- Amendments with a view to initiating the upcoming transposition of the EU UCITS V Directive (2014/91/EU), which is due on March 2016, e.g. by aligning certain of the provisions on UCITS depositaries, within the meaning of section 10 of the UCI Law, with the provisions of the UCITS V Directive;
- Amendments for the purposes of relativising unconditional reliance on credit ratings issued by credit rating agencies by requiring enhancement of risk management policies and procedures; and
Amendments for the purposes of alignment with the EU-wide distinction of investment funds into UCITS and non-UCITS, i.e. Alternative Investment Funds (AIFs), introduced pursuant to the EU AIFM Directive (2011/61/EU). In accordance with the aforesaid distinction any reference to non-UCITS investment funds has been removed from the UCI Law, given that there is in the meantime a dedicated legal framework for all types of non-UCITS. This way the UCI Law becomes a 100% UCITS dedicated piece of legislation.
The present note undertakes to briefly inform on the rationale motivating the amendments to the UCI Law provisions and on their current content following the amendment.
Our long lasting and vast experience in international business consulting enables us to fully understand the needs of your business and contribute towards its success.
This publication concentrates on the business development between Cyprus and Iran in the context of the Double Tax Treaty Agreement signed between the Government of the Republic of Cyprus and the Government of the Islamic Republic of Iran on 4 August 2015.
This, along with strong incentives given by the Cyprus Government with regards to “Cyprus citizenship by investment” scheme is expected to further develop the cooperation potentials of the two contracting states in the upcoming years. Furthermore, we will endeavor to explain the benefits offered by Cyprus and the purposes served by Cypriot companies as Holding, Financing and Intellectual Property companies, as well as the benefits secured through the establishment of an International Cyprus Trust.
This Country Report addresses the following:
- Cyprus Tax Benefits
- New Treaty between Cyprus and Iran
- Cyprus Holding Company
- Cyprus Holding Company in International Investment
- Cyprus Back -to- Back Financing
- National Interest in Cyprus Financing Structures
- Cyprus IP Box Regime
- Capitals Gains Treatment
- Cyprus Shipping: Tonnage Tax Scheme
- Cyprus International Trust
For our full report please click Cyprus & Iran Country Report
Law 4072 of 2012 (the “Law”) introduced in Greece a new type of company, the Private Company (“PC”) (“Idiotiki Kefalaiouchiki Etaireia” or “IKE” in Greek) in order to meet the growing need for a modern and flexible limited liability middle- sized company.
After three years since its creation, the Private Company may be characterised as a success with the establishment up to this day of over 10000 Private Companies since 2012 and a clear preference of businesses to choose this type of company over the pre- existing structures, according to an announcement of the Ministry of Development in April 2014.
ADVANTAGES OF THE PRIVATE COMPANY IN RELATION TO OTHER TYPES OF GREEK COMPANIES
- Zero capital requirements.
- Quick establishment with minimum expenses (as usually the involvement of a Notary is not required) and simpliﬁed procedure.
- Provided the Articles comply with the requirements of the Law, they may be drafted accordingly to suit the particular needs of a type of business as well as of its members, enabling the company to be shaped either closer to a partnership or closer to a Societe Anonyme.
- Very ﬂexible corporate form (meetings can be held through teleconference and abroad, any amendments and changes are made by a private agreement).
- Corporate documentation may be drafted also in any oﬃcial EU language.
- Only the manager and the sole member (in case of a single- membered PC) are subject to compulsory registration at the local insurance organisation (as opposed to all members/ partners in other types of companies).
To read full text in English and/or Russian please click on the links below.
PRIVATE COMPANIES (IKE) ENG PRIVATE COMPANIES (IKE) RU
On the 14th of July 2015, Iran and the Permanent Members of the UN Security Council and Germany reached a historic agreement. The sanctions imposed on Iran for its nuclear activities were lifted after the agreement of Iran to gradually limit such activities.
Iran, the economy of which suffered its greater blow in the years following 2012, especially after the foreign direct investments in the country reached zero, is now able to return to the global markets.
The omens of an early financial recovery are, prima facie, impressive, whilst the impact on the global economy is anything but negligible. It is said that Iran will be able to recover in its pre-2012 position in less than two years-time.
Iran is one of the main oil-producing countries. Its production capabilities reach 1 billion barrels per day, whilst its stockpiles reserves are said to reach 30-40 million barrels on the day immediately following the lift of the sanctions. This effectively means that Iran will cause a reduction in the oil prices by 14%, i.e. USD 10, therefore large oil importers such as EU and US will be in a more advantageous position by having the capability to increase their petrochemical-related productions.
As oil-exports in Iran are reinstated, the country’s economic orbit will also start functioning again. This, in addition to the USD 107 billion worth of frozen assets and the USD 15 billion of revenue expected to be produced in Iran in the first year of sanction lift, will allow Iran to boost the sectors which were most profitable prior to 2012. Therefore, it is expected that Iran will boost its automobile, pharmaceuticals, manufacturing and tourism, banking and other services sectors. It has also been suggested that Iran should increase its competitiveness in high-technologies industries and the telecommunications sector, in an effort to modernise the same.
Cyprus – Iran cooperation: the cooperation potentials
The lift of the sanctions in Iran as well as the industries constituting the pillars of Iran’s economy, create important prospects of economic prosperity both for Iran as well as its’ trading partners. Cyprus, being in the forefront of this recent historic development, concluded, on the 4th of August 2015, an important cooperation agreement with Iran, namely the double tax treaty agreement (“DTT”).
The DTT effectively provides for favorable taxation of, inter alia, royalties and dividends.
Royalties are taxed at a fixed rate of 6% whilst the provisions on dividends distinguish between companies the beneficial owner of which holds at least 25% of the issued and allotted capital of the company that pays the dividends, and other cases. In relation to the former, the withholding tax rate is 5% whilst in all other cases is 10%.
Regarding dividends, it is important to note that, currently neither Iran nor Cyprus imposes withholding tax on dividends (the treaty rates will only apply in the event where the relevant legislation of either or both countries imposes such tax).
The provisions of the DTT constitute important incentives for the promotion of cooperation between the two countries, especially if viewed in light of the provisions of the Cyprus IP Box Regime, considered below.
The Cyprus IP Box Regime- the time is now
Intellectual property rights have already been widely recognised as the most valuable asset of a business. The same was recognised in a flamboyant manner by the Cyprus authorities in 2012, when the IP Box Regime was introduced. The IP Box Regime applies to all intellectual property rights and allows Cyprus companies which are the owners of intellectual property rights to be 80% exempted off withholding tax applying on the exploitation and disposition of such intellectual property rights as well as make use of a five year amortization period in respect of the acquisition of such rights.
Cyprus elected to opt for an IP Box the purpose of which was to attract new investments. Therefore the same does not restrict its application to companies that have borne the research and development costs. Nonetheless, the IP Box regime will be gradually forced to extinction, pursuant to the OECD Nexus Approach policy. Pursuant to the same IP Boxes should turn towards the promotion of research and development and not towards investment attraction. Therefore, the final call for applicants wishing to exploit the advantages of the IP Box regime is the 30th of June 2016. This date is considered as the lock down date, since no further entrants will be accepted whilst current entrants will not be allowed to exploit any additional intellectual property rights. The IP Box regime, as it currently stands, will continue to apply to existing entrants only, until the 30th of June 2021.
Geographical Proximity: a leap into Europe
It is no secret that Cyprus’ geopolitical position, the same being in the Mediterranean Sea and the crossroads of three continents, i.e. Europe, Asia and Africa, is a pole of attraction for many businesses around the globe.
Similarly, the island is expected to attract Iranian businesses as well as businesses wishing to do business in Iran. Apart from the many legislative and fiscal advantages some of which have already been mentioned above; the island is also a Member of the European Union as from the 1st of May 2004. This, in addition to the fact that Cyprus is in the center of some of the most important trade partners of Iran, namely Britain, Turkey and Saudi Arabia as well as in good terms with countries such as China (currently the most important trading partner of Iran) and India are expected to boost the potentials of the cooperation between Cyprus and Iran.
The Intellectual Property Rights Aspect
Iran provides for immense opportunities in the field of intellectual property, the reason being that Iran’s economy is based on sectors such as the automobile, pharmaceuticals, manufacturing and service provisions. Considering that the majority of its economy depends on exports into, inter alia, Europe and the US, it may be argued that the need for community and international trademarks, patents and pharmaceutical product certificates, copyrights and trade secret protection, branding, marketing and product advertising as well as corporate restructuring and fiscal advise is expected to be in high demand in the near future. Cyprus, offering the advantages already mentioned herewith, is undeniably ideal both in terms of geographical positions as well as in terms of legislative framework.
The DTT between Cyprus and Iran triggered the unfolding of the Cyprus legislative framework, jurisdictional advantages and the ability of the same to assist in Iran’s reinstatement in the global markets.
As far as intellectual property rights are concerned, the industrial activity of Iran, being export-depended, and the European flair of Cyprus, in conjunction with the recent advantages introduced by the DTT as well as the IP Box regime prove that the cooperation potentials between Iran and Cyprus are more than the wishful thinking of two Economy ministers.