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CYPRUS AND MALTA YACHT LEASING SCHEMES: A COMPARISON

Frequently, questions arise as to the comparison between the Cypriot and the Maltese Yacht Leasing Schemes. Although the principles on which both schemes are based are the same, there are some practical differences which may lead one to choose the one over the other.

We trust that the attached comparison will be a useful tool in order to understand these differences.

Christodoulos G. Vassiliades & Co LLC may assist with the implementation of the scheme in either jurisdiction.

Should you have any further questions or require any further assistance, please feel free to contact us.

Cyprus v Malta Comparison Guide

Vassiliades & Co. (Malta) Limited Guide on Malta Ship Registry: Registration of Ship Mortgages

Registration of Ship Mortgages

The Firm is committed to providing high quality service in the field of Shipping Law. It offers legal services to ship owners, charterers, ship managers and ship financing institutions. Advice is given on the sale/ purchase of vessels, ship registration, charter agreements, ship financing and registration of mortgages. In a ship mortgage, a debtor (mortgagor) provides a creditor (mortgagee) an interest in a ship as security for the repayment of a loan or the performance of some other obligation.

Advantages

There are various advantages of Maltese mortgages, some of which including the following. Mortgages have a high ranking form of security and they constitute executive titles. They may be assigned or amended.  In the case of an assignment, the assignee of part of a debt or other obligation secured by a registered mortgage of a ship or share can demand that the assignment be entered in the register of the particular ship for the part so assigned. With regards to amendments, when a registered mortgage is amended, such amendment shall form an integral part of the registered mortgage and such amended mortgage shall have the same priority as it had before such amendment was noted.  An amendment of a mortgage shall be effected for example in order to increase the amount of capital secured by such mortgage. A registered mortgage of a ship or share may be transferred to any person by an instrument of transfer executed by the transferor in the presence of, and attested by, a witness or witnesses. A ‘power of attorney’ may be granted to the Mortgagee in addition to the mortgage as a form of added security, which will only apply in case of default on the part of the Mortgagee.

Registration

A mortgage over a Maltese ship shall have effect towards third parties only once it is duly recorded in the Register. Mortgages are recorded by the Registrar in the order in time in which they are produced to him for registration. If there are more mortgages than one registered in respect of the same ship or share, the mortgages shall be entitled in priority, one over the other, according to the date and time at which each mortgage is recorded in the register. Through a memorandum under his hand, the Registrar has to notify on each mortgage, that such mortgage has been recorded by him and has to state the day and hour of that record. In the case that the mortgage instrument states that it is prohibited to create further mortgages over a vessel without the prior written consent of the mortgagee, the registrar shall not record such further mortgage unless the consent in writing of the holder of a prior mortgage is produced to him. Any mortgage that is registered in violation of this is null and void. If a further mortgage is executed in favour of an existing mortgagee, the mortgagee’s consent shall not be required. In the case that the mortgage instrument states that it is prohibited to effect the transfer of the ship that is being mortgaged, or of a share therein, without the previous written consent of the mortgagee, the registrar shall not record any transfer of such ship or of a share therein unless the consent in writing of such mortgagee is produced to him, saving where the transfer is made pursuant to a court order in a sale by auction of such a ship or pursuant to any other court order. Any transfer that is registered in violation of this is null and void.

 Rights of Mortgagee

In the event of default of any term or condition of a registered mortgage or of any document or agreement referred to therein, the mortgagee shall, upon giving notice in writing to the mortgagor, be entitled a) to take possession of the ship or share therein in respect of which he is registered; b) have power absolutely to sell the ship or share in respect of which he is registered; and c) have power to apply for any extensions, pay fees, receive certificates, and generally do all such things in the name of the owner as may be required in order to maintain the status and validity of the registration of the ship.

 Maltese Mortgage Form and Deed of Covenants

Ship mortgages may be registered in the Registry of Shipping by filing a Mortgage Deed. Apart from this mortgage deed, there is a deed which complements the mortgage form which is the ‘deed of covenants’. It contains certain provisions which cannot be included in the mortgage form. It contains provisions regarding the mortgagee’s right to carry out inspections on the vessel, the mortgagor’s obligation to provide the mortgagee with certain information and so on.

Foreign Mortgages

Foreign mortgages are recognised as mortgages with the status, rights and powers specified in the Merchant Shipping Act provided that certain conditions are met. The mortgage (i) must have been validly recorded in the registry of ships of the country under those laws the ship is documented, (ii) the registry is a public registry, (iii) the mortgage appears upon a search of the registry and (iv) such mortgage is granted a preferential and generally equivalent status as a mortgage under the Merchant Shipping Act under the laws of the country where the mortgage is registered.

CYPRUS INTRODUCES “DOMICILE” CONCEPT: AIM TO ATTRACT HIGH-EARNERS RELOCATE TO CYPRUS

In an effort to enhance the competitiveness, fairness and simplicity of the Cyprus Tax system and make it more attractive to foreign investors, the Cyprus Government passed on the 9th of July 2015 among others the introduction of “Domicile” concept. The introduction of the non-domicile rules aims to attract high-earners relocate to Cyprus and use Cyprus as a business centre, by transferring the headquarters of their business and creating real substance.

The Case before the Amendment of the Law
An individual who spends a period or an aggregated period of more than 183 days in a tax year in the Republic of Cyprus is subject to both Income Tax and Special Defence Contribution (SDC). Domestic or foreign-sourced income of a Cyprus resident, taking the form of dividends, interest or rent was subject to SDC.

The Amendment of the Special Defence Contribution
According to the amendment of the Law and the non-domicile rules introduced, an individual who is a tax resident of Cyprus under the provisions of the Income Tax Law (183 days rule mentioned before) BUT he is “not-domiciled” in the Republic of Cyprus, will be exempt from SDC.

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Vessel Registration Guide

Christodoulos G. Vassiliades & Co. LLC is pleased to share its detailed Vessel Registration Guide in relation to the following jurisdiction in which we provide relevant services:

  1. The Cyprus Ship Registry
  2. The Belize Ship Registry
  3. The Malta Ship Registry
  4. The Marshall Islands Ship Registry
  5. The Panama Ship Registry
  6. The Liberian Ship Registry

CGV Vessel Registration Guide

 

GREECE: Permanent Residence Permit for Investors in Real Estate

Law 4251of 2014, also referred to as the Immigration and Social Integration Code, (as amended on 9th July 2015, and hereinafter referred to as the “Law”), provides the opportunity to non- European Union nationals to obtain a permanent residence permit by investing in real estate in Greece.

ADVANTAGES

  • Possibility to stay in Greece continuously for the entire duration of the residence permit and to have access to public health and education, in the same terms and conditions as Greek citizens.
  • Possibility to travel freely within the Schengen area, without a visa, provided that the stay in the said countries does not exceed 90 days per six- month period, with a right to multiple entries, without it being required to enter the Schengen area through Greece.
  • Possibility to lease the real estate property or properties acquired in Greece and receive rent.
  • Possibility to renew the residence permit as many times as the applicant wishes (so long as the conditions required by the Law remain fulfilled) for 5- year periods.
  • Absences from Greece do not impede the possibility for renewal of the residence permit.
  • Possibility to enter into the regimes for long- term residency or acquire the citizenship provided that the specific conditions required by law for accessing those regimes are fulfilled in addition.

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Cyprus IP Box regime: The “Right Time” for structuring the exploitation of IP assets before 30 June 2016

Intellectual property is increasingly becoming one of the most valuable assets of businesses. Thus, choosing the appropriate regime/location for structuring the exploitation of IP assets is vital in order for businesses to achieve business development, effective IP protection and maximum tax optimisation.

Cyprus IP Box Regime: Effective Tax Rate at 2.5% – Lowest in Europe

Cyprus offers an advantageous regime for businesses investing in IP rights. The IP Box Scheme put in place with effect from 1st January 2012 was a package of incentives and tax exemptions concerning income from intellectual property rights, intended to urge investment in research and development. The Cyprus corporate income tax rate at 12.5% would normally apply to the 100% of net profits produced. However, following the applicable tax exemptions, only 20% of the profits will be taxed, reaching an effective rate of 2.5% per annum. At 2.5%, this rate is considerably lower than the respective percentage in other countries offering similar ‘IP Box’ schemes, including Luxembourg at 5.7%, the Netherlands at 5% and the United Kingdom’s ‘Patent Box’ regime at 10%. The efficient IP tax regime of Cyprus in conjunction with the protection offered by EU and all major IP treaties and protocols in which Cyprus is signatory is what makes Cyprus highly attractive for the acquisition or development IP assets.

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EUROPEAN LONG-TERM INVESTMENT FUNDS: Investments In The Energy Infrastructure Of The Region And In Other Long-Term Projects Through Cyprus

The increasing public discourse, including political and diplomatic mobility, as to energy exploitation in the Mediterranean and subsequent energy distribution, also includes the construction of the necessary energy infrastructure projects. The proximity of Cyprus to the recently discovered sources of energy in the Mediterranean, renders Cyprus a potential candidate for the construction of energy infrastructure projects. At the same time Cyprus is also an international shipping centre, involved in financing the construction of vessels. However, the significant length and cost of such projects (energy infrastructure and shipping finance) automatically raise the question of their smooth and viable financing. Recently adopted European Union Law in the form of a Regulation, undertakes to provide a financing tool for such and other projects of long-term nature by introducing the ‘European Long-Term Investment Funds’. This way, a legal framework tailored to the needs of long-term investments is established, which interacts with the current local investment funds framework, adds value to Cyprus’ physical proximity to possible long-term projects and allows for Paneuropean fundraising possibilities from both professional and retail investors. ‘European Long-Term Investment Funds’ are also eligible applicants for financing from the European Investment Bank, whereby the relevant application is assessed by priority.

The present memo undertakes to provide a brief overview of this new legal framework and of its interaction with the investment funds legal framework currently applicable in Cyprus. The aim is to facilitate, through Cyprus, the financing of long-term projects in Cyprus, the European Union and in third countries.

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ΣΥΣΤΗΜΑ ΦΟΡΟΥ ΧΩΡΗΤΙΚΟΤΗΤΑΣ

Φόρος Χωρητικότητας
Ο Περί Εμπορικής Ναυτιλίας (Τέλη και Φορολογικές Διατάξεις) Νόμος παρέχει πλήρη απαλλαγή σε πλοιοκτήτες, ναυλωτές και διαχειριστές πλοίων από κάθε φόρο επί των κερδών επιβάλλοντας ΦΧ στη καθαρή χωρητικότητα των πλοίων, εφόσον πρόκειται για ‘επιλέξιμα πρόσωπα’ τα οποία έχουν στην ιδιοκτησία τους, ναυλώνουν ή διαχειρίζονται ‘επιλέξιμο πλοίο’ σε ‘επιλέξιμη ναυτιλιακή δραστηριότητα’

 

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THE CYPRUS SHIP REGISTRY

Economic benefits:

  • No tax on profits from the operation or management of a Cyprus-registered vessel or on dividends received from a vessel-owning company.
  • No income tax on the wages of officers and crew.
  • Low registration costs.
  • Favourable tonnage tax scheme based on ship net tonnage.
  • No stamp duty on ship mortgage deeds or other security documents.
  • Double tax treaties with 43 countries.
  • No exchange control and freedom of movement of foreign currency.
  • Full protection for financiers and mortgagees.
  • Low set up and operating costs for companies.

Read More (GR)                                                                                                                            Read More (ENG)

THE CYPRUS INTERNATIONAL TRUST AND THE PANAMANIAN FOUNDATION: EACH AN ADVANTAGEOUS MODEL AND TOGETHER AN UNRIVALLED STRUCTURE

  • Both the Cyprus International Trust as well as the Panamanian Foundation offer flexibility and confidentiality regarding the settlor and founder, respectively as well as the beneficiaries and successors, respectively.
  • Solely and collectively, these two models are widely used by Very High Net Worth Individuals and Ultra High Net Worth Individuals for purposes of their personal wealth management and inheritance planning.
  • Both models when used together achieve the highest level of confidentiality and personal wealth management.
  • A proposal is provided on how these two models may be adopted as well as the practical steps that should be considered when using such structure.

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