Shipper may swap Bermuda for Cyprus

A Norwegian-born Cypriot billionaire wants to move his shipping company to Cyprus to reap the benefits, including a European Union-approved tonnage tax regime available only to tax residents of the island, which is scrambling to keep its industry afloat amid sanctions against Russia.

Bermuda-based shipping company Frontline Ltd will hold a special general meeting in the Republic of Cyprus this month, as its Norwegian owner John Fredriksen, who also holds a Cypriot passport, is asking shareholders to approve the move.

According to media reports, the company filed a document with the US Securities and Exchange Commission, saying, “Frontline believes that the redomiciliation will, among other things, provide legal, administrative and other similar efficiencies.”

“As a well-established shipping and ship management center, Cyprus is expected to provide many benefits to the company, including but not limited to recruitment of experienced commercial and administrative and management personnel, a comprehensive tonnage tax regime, approved by the European Union, and a geographically advantageous position between our key market time zones,” the document read.

Cyprus’ tonnage tax system allows qualifying shipowners, charterers and managers to be subject to an annual tax referred to as tonnage tax, which is calculated on the basis of the net tonnage of the qualifying ships they own.

Eligibility for the tax regime, which was first approved by the European Commission as compatible with the EU acquis, is based on the owner being a tax resident of the Republic of Cyprus, owning a qualifying ship, and having opted to be taxed under a system for a qualifying shipping activity.

Back in March, Frontline CEO Lars Barstad said it was unlikely to transport Russian crude oil following the invasion of Ukraine. “The EU, the United States and Britain have specifically excluded oil and gas from sanctions, so we’re not ruling it out. That said, on a practical level we are unlikely to transport Russian oil on our vessels the way things are developing,” Barstad was quoted as saying.

But as price caps imposed by Western powers on Russian crude began this week, reports pointed to shadow fleets and traffic jams of tankers as Moscow was suspected of rerouting some of its oil to willing buyers.