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In May 2015 Cyprus initiated a very interesting exemption to Cyprus Corporate Taxes. The Notional Interest Deduction is a tax credit for virtual interest on the company’s capital. This “interest” can be deducted from profits like interest paid to a third party. The heights of the “interest” rate depends on where the company has invested its capital. Basis for the calculation is the rate for 10-year bonds.

It is calculated – if the capital is invested within Cyprus – with the rate of Cyprus 10-year bonds + 3%, multiplied by the paid-up capital of the Limited Company. If invested elsewhere, local yield will be used, but the minimum always remains the Cyprus yield. The interest rates to be used are of December 31 of the preceding year.

Here is a list of the interest rates to be used in 2020:

10-year bond
rate
Reference rate
for 2019
Armenia 8.064% 11.064%
Austria 0.016% 3.536%
Belarus (USD) 5.350% 8.350%
British Virgin Islands N/A 3.536%
Bulgaria 0.257% 3.536%
Canada 1.699% 4.699%
China 3.130% 6.130%
Croatia 0.621% 3.621%
Cyprus 0.536% 3.536%
Czech Republic 1.569% 4.569%
France 0.115% 3.536%
Germany -0.210% 3.536%
Greece 1.413% 4.413%
Hong Kong 1.699% 4.699%
Hungary 2.017% 5.017%
India 6.557% 9.557%
Ireland 0.120% 3.536%
Italy 1.414% 4.414%
Kazakhstan 0.996 3.996%
Latvia 0.136% 3.136%
Luxembourg 0.087% 3.536%
Mauritius 4.360% 7.260%
Netherlands -0.060% 3.536%
Norway 1.540% 4.540%
Poland 2.109% 5.109%
Romania 4.398% 7.398%
Russia 6.270% 9.270%
Russia (USD) 2.605% 5.605%
Serbia 2.778% 5.778%
Slovakia 0.192% 3.536%
Slovenia 0.267% 3.536%
South Africa 9.018% 12.018%
Spain 1.413% 5.302%
Sweden 0.463% 3.536%
Switzerland -0.454% 3.536%
Ukraine (USD) 6.504% 9.504%
United Kingdom 0.817% 3.817%
United States 1.919% 4.919%

 

Quick Info:

A certain percentage of your capital can be deducted from profits. The rate is depending from the country where you had invested.

 

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