Reference Interest Rates for 2024 for Notional Interest Deduction on Equity

The Cyprus Tax Department published on 7 March 2024 the bond yield rates as at 31 December 2023 for a number of countries, to be considered for the Notional Interest Deduction (NID) to which equity injected in to Cyprus companies is entitled for 2024. The rates can be found on the website of the Cyprus Tax Department by clicking here.

It is reminded that equity introduced to a company as from 1 January 2015 (new equity) in the form of paid-up share capital or share premium is eligible for an annual NID for tax purposes. The deduction is calculated as a percentage (reference rate) on the new equity. The relevant reference rate is the yield of the 10 year government bond (as at December 31 of the previous tax year) of the country where the funds (the new equity) are invested in the business of the company, plus a 5% premium.  

The NID is deducted from the taxable income of a company for as long as the new equity financing is used in its operations. The deduction is subject to a number of conditions, including a taxable-income limitation.

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