2018 Cyprus Reference Rates for Notional Interest Deduction

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The Cyprus Tax Department has recently announced the official reference rates of the 10-year government bonds of a number of countries as at 31 December 2017. These rates, when increased by 3%, will constitute the reference rates for the purpose of calculating Notional Interest Deduction (NID) for the year 2018.

Specifically, Article 9B of the Income Tax Law of 2002 as amended provides for a notional interest deduction for tax purposes on new equity capital injected into Cyprus resident companies or permanent establishments of foreign companies in Cyprus as from 1 January 2015, provided the new equity funds are used for business purposes.

The reference rate is equal to the 10-year government bond yield as at 31 December 2017 of the applicable country where these funds have been applied, increased by 3%; with the minimum reference rate used being the one relating to Cyprus (i.e. 1.881% plus 3% = 4.881%). When applied as per the relevant provisions, the NID reference rate results in a notional interest expense that can reduce the relevant taxable profit. More on NID can be found on our related detailed information sheet by clicking here.

The 2018 reference rates that have been announced by the Cyprus Tax Department are set out on the table below.

NOTE: The 2017 NID reference rates can be found here.

  Country

  10-year Bond Yield

  2018 NID Reference Rate

  Cyprus

  1.881%

  4.881%

  Germany

  0.423%

  3.423%

  United Arab Emirates

  N/A

  N/A

  United Kingdom

  1.188%

  4.188%

  India

  7.571%

  10.571%

  Latvia

  0.715%

  3.715%

  Ukraine (expressed in USD)

  7.222%

  10.222%

  Poland

  3.385%

  6.385%

  Romania

  4.314%

  7.314%

  Russia

  (expressed in USD)

  7.590%

  3.822%

  10.590%

  6.822%

  Czech Republic

  1.650%

  4.650%

  British Virgin Islands

  N/A

  N/A

  Austria

  0.563%

  3.563%

  France

  0.780%

  3.780%%

  Greece

  4.073%

  7.073%

  United States

  2.406%

  5.406%

  Ireland

  0.811%

  3.811%

  Spain

  1.558%

  4.558%

  Italy

  2.005%

  5.005%

  Kazakhstan

  N/A

  N/A

  Canada

  2.079%

  5.079%

  China

  4.268%

  7.268%

  Croatia

  2.453%

  5.453%

  Belarus (expressed in USD)

  5.946%

  8.946%

  Luxembourg

  0.637%

  3.637%

  Norway

  1.579%

  4.579%

  South Africa

  8.780%

  11.780%

  Netherlands

  0.501%

  3.501%

  Hungary

  2.031%

  5.031%

  Serbia

  5.968%

  8.968%

  Slovakia

  0.815%

  3.815%

  Slovenia

  0.843%

  3.843%

  Sweden

  0.540%

  3.540%

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