2019 Cyprus Reference Rates for Notional Interest Deduction

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The Cyprus Tax Department announced on 30 January 2019 the interest rates of the 10-year government bonds for a number of countries as at 31 December 2018. These rates, when increased by 3%, will be used as reference rates for calculating Notional Interest Deduction (NID) for the year 2019.


The application of NID is governed by Article 9B of the Income Tax Law of 2002 as amended, which 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 for year 2019 is equal to the 10-year government bond yield as at 31 December 2018 of the country in which these funds have been applied, increased by 3%, with the minimum reference rate used being the one relating to Cyprus (i.e. 2.302% plus 3% = 5.302%). 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 2019 reference rates that have been announced by the Cyprus Tax Department are set out on the table below.


NOTE: The 2018 NID reference rates can be found here and the 2017 rates can be found here.

 

  Country

  10-year Bond Yield

  2019 NID Reference Rate

  Cyprus

  2.302%

  5.302%

  Austria

  0.484%

  3.484%

   Armenia

  6.385%

  9.385%

  Belarus (expressed in USD)

  7.226%

  10.226%

  British Virgin Islands

  N/A

  N/A

  Bulgaria

  0.966%

  3.966%

  Canada

  1.965%

  4.965%

  China

  3.261%

  6.261%

  Croatia

  2.415%

  5.415%

  Czech Republic

  1.884%

  4.884%

  France

  0.705%

  3.705%

  Germany

  0.284%

  3.284%

  Greece

  4.346%

  7.346%

  Hong Kong

  1.946%

  4.946%

  Hungary

  2.971%

  5.971%

  India

  7.261%

  10.261%

  Ireland

  1.166%

  4.166%

  Italy

  2.739%

  5.739%

  Kazakhstan

  N/A

  N/A

  Latvia

  1.029%

  4.029%

  Luxembourg

  0.522%

  3.522%

  Mauritius

  5.380%

  8.380%

  Netherlands

  0.383%

  3.383%

  Norway

  1.754%

  4.754%

  Poland

  2.812%

  5.812%

  Romania

  4.811%

  7.811%

  Russia

  (expressed in USD)

  8.720%

  5.020%

  11.720%

  8.020%

  Serbia

  4.722%

  7.722%

  Slovakia

  0.789%

  3.789%

  Slovenia

  1.166%

  4.166%

  South Africa

  9.206%

  12.206%

  Spain

  1.413%

  4.413%

  Sweden

  0.457%

  3.457%

  Switzerland

  (0.197%)

  2.803%

  Ukraine (expressed in USD)

  10.780%

  13.780%

  United Arab Emirates

  N/A

  N/A

  United Kingdom

  1.275%

  4.275%

  United States

  2.685%

  5.685%

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