2018 yield rates announced by the Cyprus Tax Authorities for Notional Interest Deduction

With effect from 1 January 2015 Cyprus introduced for tax purposes an annual Notional Interest Deduction on new equity of companies. The new equity is paid-up share capital and share premium introduced to a company as from that date. The annual NID is calculated as an interest rate on the eligible share capital / premium. The NID interest rate is defined as the yield on 10-year government bonds (as at 31 December of the prior tax year) of the country where the funds are employed in the business of the company plus a 3% premium. This is subject to a minimum rate which is the yield of the 10-year Cyprus government bond (as at the same date) plus a 3% premium. For the year 2018 the Cyprus Tax Authorities have announced the interest yields of the 10-year government bonds for the following countries. Based on the CTA announcement, the NID interest rate (i.e. the interest yield of the 10-year government bonds plus 3%) for tax year 2018 for funds employed in the below countries is as set out in the table below:

 

Country where the funds are employed
2018 NID interest rate
Cyprus, Austria*, Czech Republic*, France*, Germany*, Ireland*, Latvia*, Luxembourg*, Netherlands*, Norway*, Slovakia*, Slovenia*, Spain*, Sweden*, UK* 4,881%
Canada 5,079%
China 7,268%
Croatia 5,453%
Greece 7,073%
Hungary 5,031%
India 10,571%
Italy 5,005%
Poland 6,385%
Romania 7,314%
Russia 10,590%
Russia (denominated in US dollars) 6,822%
Serbia 8,968%
South Africa 11,780%
USA 5,406%
*The Cyprus NID interest rate is used as it is the minimum.

 

Five countries have been announced as Non-Applicable:

1. Belorussia
2. BVI
3. Kazakhstan
4. UAE
5. Ukraine