Cyprus: Shipping, Yes, But Cyprus Also Has The Potential To Become A Preferred Jurisdiction For Aircraft Registrations Within The EU

Last Updated: 8 October 2019
Article by Andreas Christofides

Cyprus is widely recognised as a leading forum in the international maritime industry. This global success story may sometimes overshadow the significant advantages and benefits that Cyprus offers in other sectors. Aviation is one such example.

Aviation experts will say a country's gold standard for registering aircraft, be it commercial or private, is high regulatory standards, a high level of service, a quality reputation, and an attractive simplified tax regime.

Cyprus, whose aviation industry is bursting with potential, had as of December 31, 2018 some 120 aircraft registered, according to official figures. These include 13 planes, 62 light aircraft, 28 ultralights and 15 helicopters.

To highlight Cyprus potential, Ireland, which is also one of Europe's well-known aviation forums, is used for comparison. In the detailed table (overleaf) a comparison is made in terms of the relevant legislation along with requirements and restrictions, registration fees, airworthiness fees, timeframes and other advantages.

When it comes to advantages, both Ireland and Cyprus have much in common from the corporate tax rate of 12.5% to an extensive network of double-taxation treaties and VAT exemptions in a number of areas.

Other factors that make Cyprus an attractive jurisdiction is its EU membership and the fact the island's financial system transacts in euros. Cyprus possesses a well-trained and versatile labour force including qualified professional, technical and clerical staff with wide experience and fluency in English and other languages who are available for employment at a reasonable remuneration.

Cyprus also has experienced service providers including corporate services, auditors, tax and legal advisers. There are no thin capitalisation rules, and the administrative procedures for registering a Cyprus company are very simple. The government is totally committed to the development of the economy, infrastructure and the protection of foreign investment.

The table overleaf highlights why Cyprus is at the very least as equally equipped as Ireland to accommodate the needs of the aviation industry. Its favourable unique leasing scheme for private aircraft is worth exploring in depth. This involves the lease of an aircraft with a possible option to purchase at an agreed price. It essentially reduces the percentage of the cost of an aircraft used for pleasure/private purposes that is subject to VAT to reflect the proportion of its usage that takes place outside the EU.

The scheme is available for any private aircraft owned by a company registered for VAT in Cyprus that is leased to any physical or legal person established, permanently resident or ordinarily resident within the Republic and not engaged in any business activity.

It does not require detailed records to be submitted on the use of the asset. Instead it bases the percentage of the cost subject to VAT on two simple factors, namely the type of aircraft and its maximum take-off weight. Similar schemes in other EU countries are more complex and generally result in a higher overall tax cost. The percentage of the cost subject to VAT is based on the type and the maximum take-off weight, using three aircraft types and four weight bands.

In order to benefit from the scheme, the prior approval of the VAT Commissioner must be obtained. The application for approval must be accompanied by a copy of the lease agreement, together with documentation supporting the purchase price or value of the aircraft, the requisite noise certificate, manufacturer's type certificate, Certificate of Airworthiness and Airworthiness Review Certificate.

The lease agreement must be between three months and five years. There is an initial payment to the lessor of at least 40% of the value of the aircraft and subsequent lease payments must be payable on a monthly basis. The lessor is expected to make a profit from the monthly lease payments of at least 2.5% of the initial value of the aircraft.

If the lessee is entitled to purchase the aircraft at the end of the lease period the price must be at least 2.5% of the value of the aircraft, giving an overall profit on the leasing agreement of 5% of the value of the aircraft. The profit of the leasing company is subject to corporate income tax at 12.5%.

The aircraft must also fly to Cyprus within two months from the date of commencement of the lease agreement. The VAT Commissioner may allow an extension of this time limit under conditions. The aircraft can be registered anywhere in the world.

If any private aircraft is used solely and exclusively within Cyprus airspace, then its leasing is considered to be a taxable transaction and is taxable at the standard rate applicable in Cyprus and is calculated on the total value of the lease.

To sum up; the tax incentives combined with its strategic location, the economic and the other advantages, including the excellent infrastructure, highly skilled workforce and lower costs compared to other EU jurisdictions, render Cyprus one of the most attractive options for registering, operating and owning aircrafts as well as for cross-border aircraft leasing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Chrysses Demetriades & Co
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Chrysses Demetriades & Co
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions