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.
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