2017 Cyprus Reference Rates for Notional Interest Deduction

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The Cyprus Tax Department has recently announced the official 2017 reference rates to be used for Notional Interest Deduction (NID) purposes. 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 relates to the 10-year government bond yield as at 31 December 2016 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. 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 countries for which the relevant 2017 reference rates have been announced by the Cyprus Tax Department are:

  Country

  10-year Bond Yield

  2017 NID Reference Rate

  Cyprus

  3.489%

  6.489%

  Germany

  0.204%

  3.204%

  United Arab Emirates

  3.326%

  6.326%

  United Kingdom

  1.326%

  4.326%

  India

  6.878%

  9.878%

  Latvia

  0.894%

  3.894%

  Ukraine

  8.705%

  11.705%

  Poland

  3.627%

  6.627%

  Romania

  3.748%

  6.748%

  Russia

  (expressed in USD)

  8.380%

  4.409%

  11.380%

  7.409%

  Czech Republic

  0.414%

  3.414%

 

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