On 16 March 2023, the Cypriot Tax Department issued an announcement (pdf) that lists the 10-year government bond yield rates as of 31 December 2022 for a number of countries (listed in the table below) with respect to the Notional Interest Deduction (NID) on equity. These yield rates should be used to determine the reference interest rate for claiming NID for the 2023 tax year.
The key NID provisions and the applicability of the 10-year government bond yield rates are summarized below.
Notional Interest Deduction
As of 1 January 2015, Cyprus tax-resident companies (as well as foreign companies with permanent establishments in Cyprus) that carry on a business are entitled to claim a NID on their equity capital introduced on or after 1 January 2015.
The NID is deducted from the company’s taxable income for the relevant tax year (subject to any restrictions) for the period of time during which the company used the equity in carrying on its activities. The NID is subject to a number of conditions, including a taxable-income limitation.
The NID equals the multiple of the “reference interest rate” (as defined below) and “new equity.’’
“Reference interest rate” means the 10-year government bond yield of the country in which the new equity is invested, as of 31 December of the year preceding the tax year, increased by 5%.
10-year government bond yield rates as of 31 December 2022
(applicable for 2023 tax year)1
| Country | Yield rate | Country | Yield rate |
| Abu Dhabi | 4.224 | Jordan (US$) | 7.930 |
| Albania | 6.244 | Kazakhstan (€) | 4.276 |
| Argentina | 6.447 | Kazakhstan (US$) | 4.555 |
| Armenia | 11.980 | Kenya | 13.880 |
| Australia | 4.050 | Latvia | 3.688 |
| Austria | 3.170 | Lebanon | N/A* |
| Azerbaijan | 5.727 | Lithuania | 3.660 |
| Belarus (US$) | 25.593 | Luxembourg | 3.075 |
| Belgium | 3.171 | Mauritius | 5.880 |
| Bermuda (US$) | 5.043 | Morocco | 3.947 |
| British Virgin Islands | N/A* | Netherlands | 2.906 |
| Bulgaria | 5.516 | Nigeria | 13.437 |
| Canada | 3.298 | Nigeria (€) | N/A* |
| Cayman Islands | N/A* | Norway | 3.192 |
| Chile | 5.266 | Panama (US$) | 5.754 |
| Chile (US$) | 5.210 | Poland | 6.846 |
| Chile (€) | 3.889 | Portugal | 3.579 |
| China | 2.883 | Romania | 8.282 |
| Costa Rica | 9.667 | Russia | 11.230 |
| Croatia | 3.894 | Russia (US$) | N/A |
| Cyprus | 4.399 | Saudi Arabia | 3.135 |
| Czech Republic | 5.015 | Serbia | 7.036 |
| Denmark | 2.785 | Singapore | 3.102 |
| Dubai (€) | N/A* | Slovakia | 3.697 |
| Dubai (US$) | 4.377 | Slovenia | 3.781 |
| Egypt | 19.348 | South Africa | 10.788 |
| Egypt (US$) | 12.349 | Spain | 3.649 |
| Estonia | 3.637 | Sweden | 2.340 |
| Finland | 3.117 | Switzerland | 1.601 |
| France | 3.106 | Taiwan | 1.325 |
| Germany | 2.542 | United States | 3.877 |
| Guernsey | N/A* | Ukraine | N/A |
| Ghana | 39.930 | Ukraine (€) | 32.023 |
| Ghana (US$) | 25.868 | Ukraine (US$) | 34.410 |
| Greece | 4.466 | United Arab Emirates | N/A* |
| Hong Kong | 3.677 | United Kingdom | 3.665 |
| Hungary | 9.051 | Vietnam | 4.784 |
| India | 7.331 | ||
| Ireland | 3.076 | ||
| Isle of Man | 4.650 | ||
| Israel | 3.580 | ||
| Israel (US$) | 4.650 | ||
| Italy | 4.560 | ||
| Ivory Coast | N/A* | ||
| Jamaica | 6.436 |
* There are currently no government bond yield rates for the above indicated countries.
For additional information with respect to this Alert, please contact the following:
EY Cyprus Advisory Services Limited, International Tax and Transaction Services, Nicosia
Petros Krasaris
- Elina Papaconstantinou
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
