The Cyprus shipping sector continues to play a pivotal role in the island nation's economy, contributing significantly to employment and economic growth. The industry provides 9,000 onshore jobs, while over 55,000 seafarers are employed on Cyprus-flagged vessels. The Shipping Deputy Ministry remains globally recognised as a high-standard registry, ranking among the largest in the world. It has played a decisive role in securing Cyprus’ significant position on the global maritime map and in strengthening its influence in international shipping affairs.

The vibrant and resilient sector is one of the longest-serving generators of foreign direct investment and is primed for further growth. From September 2023 to the end of 2024, the Cyprus fleet grew by 18%, with 198 newly registered vessels. This expansion has raised the total gross tonnage of the Cyprus fleet to over 25 million tons. In 2024, companies registered under the Cyprus Tonnage Tax system increased by 15%, highlighting Cyprus’ continued appeal as a maritime hub. These impressive figures underscore the country’s commitment to maintaining a strong and competitive shipping environment. 

A Robust Shipping Industry

Despite global challenges, the Cyprus shipping industry continues to thrive thanks to the government's targeted action plan, both domestically and internationally, aimed at attracting new, high-quality vessels to its registry. This effort has been bolstered by ongoing regulatory improvements and a clear focus on maintaining the highest standards in safety, environmental protection, and operational efficiency.

The country’s maritime industry contributes more than €1 billion to the economy annually, which equates to over 7% of GDP, a far higher figure than in other countries engaged in merchant shipping. Of this figure, shipmanagement alone accounts for around 5%. Cyprus has a large resident shipping industry with over 250 companies based on the island covering the full range of shipping activities and related services. Foreign companies with a physical presence in Cyprus, particularly from Germany, Greece, Switzerland, Malta, and Singapore, contribute significantly.

There are many factors which have supported the steady growth of shipping in Cyprus. The island’s location at the crossroads of three continents – Europe, Africa and Asia – has played a prominent role in the success of Cyprus as a major international centre as it provides easy access to markets and the ideal time zone for international operations.

Industry players note that the appeal of Cyprus for firms who operate globally is its unique mix of strategic location, its business-friendly environment and the exceptional quality of life. In addition, the country’s well-established maritime ecosystem, supportive regulatory landscape, and easy access to talent are strong pull factors. Cyprus has also seen a significant increase in technology companies relocating their headquarters and operational units to the island. This burgeoning tech and innovation industry is also filtering into the maritime sector, making Cyprus an attractive jurisdiction for companies focused on maritime tech, bunker trading and chartering.

Strategic Reforms and Tech Transformation

Cyprus continues to enhance its maritime ecosystem through significant policy and regulatory changes. The country’s Shipping Deputy Ministry was established in 2018, implementing new supportive measures and flexible mechanisms to upgrade Cyprus’ status as one of the most formidable maritime centres worldwide. In addition, Cyprus’ two dynamic shipping associations – the Cyprus Shipping Chamber (CSC) and the Cyprus Union of Shipowners (CUS) – work closely with the state to constantly upgrade the maritime administration and to build up its competitive offering.

A more recent key development was the establishment of the One-Stop Shipping Centre in November 2023. This specialised maritime service centre aims to streamline services and support shipping companies operating within Cyprus, providing high-quality, efficient assistance for various shipping and maritime activities. By consolidating processes under one roof, Cyprus has improved service delivery and strengthened its appeal to the global shipping community.

The Shipping Limited Liability Company (S.L.L.C.) Law of 2022 marked another major regulatory milestone, designed to simplify the formation and registration of a Shipping Limited Liability Company. The establishment of a dedicated Registrar and the creation of an official registry, under the supervision of the Shipping Deputy Ministry, represents a bold move towards enhancing administrative efficiency. However, the implementation of this law depends on the adoption of new EU harmonisation legislative amendments and relevant subsidiary legislation, as well as the completion of necessary digital and administrative infrastructure.

Digital transformation also plays a pivotal role in Cyprus’ maritime vision. The full digitalisation of the Shipping Deputy Ministry is scheduled for completion in 2025. This initiative aims to improve efficiency, competitiveness, and sustainability within the sector, enhancing the global reputation of Cyprus shipping and ensuring the nation maintains its competitive edge in an evolving maritime landscape.

Competitive Tonnage Tax

A major driver of the shipping sector’s success was put in place in 2010 when, after more than 10 years of negotiations with Brussels, Cyprus secured an agreement for an upgraded and competitive EU-approved tonnage tax (TT) system. In 2020, this agreement was reapproved by the EU, and unanimously approved by the House plenum, ensuring the stability of the tax framework until 2030 and maintaining Cyprus’ prominent position in the shipping arena both on a European and international level.

The main benefit of the TT regime is the certainty it provides companies on their annual tax obligations, enabling them to do their business planning accordingly. The TT system has attracted scores of companies over the years and saw a further 15% increase in company registrations in 2024. While other jurisdictions might have less expensive TT regimes, Cyprus’ incorporates all three types of maritime activities – ship owning, shipmanagement and chartering, making it unique in the EU where other jurisdictions might specialise in just one or two of these areas.

Promoting Environmental Sustainability

As a leading advocate of sustainable shipping, Cyprus supports the 2023 IMO Strategy on the reduction of greenhouse gas emissions from ships. The country’s integrated maritime policy actively contributes to global environmental goals through a range of innovative measures.

Cyprus offers green incentives to shipowners whose vessels demonstrate effective greenhouse gas emission reductions. These incentives include a reduction of up to 30% on the annual tonnage tax for vessels achieving significant emission reductions and for the use of alternative fuels. In 2024 alone, 15 companies benefited from these incentives, resulting in a total tax reduction of €100,787 for 68 vessels.

Cyprus’ commitment to environmental sustainability also extends to the promotion of alternative fuels and environmentally friendly technologies. By aligning its policies with the IMO’s decarbonisation objectives, Cyprus continues to play a leading role in driving the global shipping industry towards a greener future.

Supporting Seafarers and Fostering Talent

The welfare of seafarers remains a top priority for Cyprus, recognising their essential contribution to the maritime industry. Measures aimed at enhancing training, ensuring compliance with the STCW 78 Convention, and promoting career opportunities are central to the government’s strategy.

A control mechanism ensures that seafarers serving on Cyprus-flagged vessels possess the knowledge and competence required for their positions, meeting or exceeding international standards. Additionally, Cyprus is investing in maritime education through partnerships with local private universities and new activities with the Ministry of Education, Sport, and Youth.

The Shipping Deputy Ministry also offers scholarships for postgraduate studies at the IMO International Maritime Law Institute and the IMO World Maritime University, with a special emphasis on promoting gender equality within the maritime sector.

Opportunities and Challenges

In 2025, the Cyprus shipping sector continues to navigate a complex landscape shaped by geopolitical tensions, environmental regulations, and technological advancements. Ongoing conflicts in Ukraine and Gaza, have disrupted traditional shipping routes, notably through the Suez Canal, leading to increased reliance on longer alternative maritime routes. These changes affect operational costs, and also have environmental implications due to higher emissions.

A significant hurdle remains the longstanding Turkish embargo, initiated in 1987, which prohibits Cyprus-flagged and Cyprus-managed vessels from accessing Turkish ports. This restriction hampers the full potential of Cyprus’ maritime industry. Moreover, a ‘second embargo’ emerged in 2023, with Turkey preventing Cyprus-flagged ships from participating in the Black Sea Grain Initiative, further limiting their operational scope.

Environmental regulations are also becoming increasingly stringent. The expansion of the EU Emissions Trading System (EU ETS) and the introduction of FuelEU Maritime are set to impose new compliance requirements on shipping companies, necessitating investments in cleaner technologies and alternative fuels.

Technological innovation offers both opportunities and challenges. Advancements in satellite communications, smart analytics, and AI-driven tools are enhancing operational efficiency and safety, with tech such as smart weather foresight, performance analytics and report alarms, as well as enhanced cybersecurity. However, the rapid pace of change raises concerns about the longevity of current investments, as vessels purchased today may not meet future technological standards.

The human element remains a critical concern. With the shortage of qualified seafarers, recruitment and retention of staff is a priority. The industry faces a global shortage of skilled seafarers, with a reported 9% gap in the officer supply pool. Companies are encouraged to invest in better training, support systems, and working conditions to attract talent and ensure the well-being of their crews.

Financially, Cyprus is making strides to bolster its maritime sector. The government plans to allocate €1 million in 2025 to promote Cyprus as a premier shipping hub. This investment aims to attract more shipping companies and enhance the country's global maritime standing.

In summary, while the Cyprus shipping industry faces significant challenges, including geopolitical tensions and regulatory pressures, it also has opportunities to innovate and grow. By embracing technological advancements, investing in human capital, and advocating for the lifting of restrictive embargoes, Cyprus can strengthen its position in the global maritime arena.

A Vision for the Future

Cyprus is setting its sights firmly on the future, determined to transform challenges into catalysts for innovation, growth, and global relevance. The country’s maritime vision is anchored in sustainability, digital transformation, and the unwavering pursuit of excellence. With a modernised registry, a stable regulatory environment, and a forward-looking Shipping Deputy Ministry, Cyprus is steadily reinforcing its position as a high-performing EU maritime centre.

Strategic priorities include expanding Cyprus’ influence in international maritime policymaking and deepening partnerships with the global shipping community. These efforts are designed not just to adapt to change, but to lead it – ensuring Cyprus remains agile in the face of geopolitical tension, environmental mandates, and rapid technological evolution.

As it champions blue careers and maritime education, Cyprus is nurturing the talent that will define the sector’s next era. It continues to enhance the competitiveness and credibility of the Cyprus flag, which has retained its reputation as one of the world’s most reliable and respected despite external constraints. More than just a hub for shipmanagement, Cyprus is emerging as a launchpad for next-generation maritime solutions – a place where innovation and resilience shapes opportunity. With clear vision and collective resolve, Cyprus is not just keeping pace with global shipping – it is helping to steer its future.

For more information, contact Cyprus' investment promotion agency, Invest Cyprus.

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April 2025