Cyprus: Notional interest deduction, new reference rate rules

Cyprus: Notional interest deduction, new reference rate

The notional interest deduction rules have been amended by the Cyprus Income Tax (Amending) Law 66(I)/2020.

1000

Previously, the notional interest deduction reference rate was defined as the interest rate of the 10-year government bond yield of the country in which the new equity is invested (as published annually) or of Cyprus (as at 31 December of the previous tax year), whichever is the higher, increased by 3%. 

The amendment provides that the reference rate for the notional interest deduction is defined as the interest rate of the 10-year government bond yield of the country where the new equity is invested (as published annually) increased by 5%. The interest rate of the Cyprus 10-year government bond will no longer be used as a comparison but will only apply in the event the country in which the new equity is invested has not issued any government bond up until 31 December of the year prior to the year in question.

The amendment is effective retroactively as of 1 January 2020.

Read a June 2020 report prepared by the KPMG member firm in Cyprus and that includes a table of reference rates

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.


For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal