The Cyprus Tax Department has published the 10-year government bond yield rates that will be used to calculate the Notional Interest Deduction (NID) for the 2026 tax year. These rates are based on data as at 31 December 2025 and apply to different countries.
What is the NID?
The Notional Interest Deduction (NID) allows businesses to claim a tax deduction on new equity, similar to how interest is deducted on loans.
It is available to:
- Cyprus tax-resident companies
- Foreign companies with a permanent establishment in Cyprus
The NID applies to new equity introduced on or after 1 January 2015.
How is it calculated?
The NID is calculated by applying a reference interest rate to the new equity. This rate is:
- The 10-year government bond yield of the country where the funds are invested
- Plus 5%
The rates published by the Tax Department must be used for the 2026 calculation.
What should businesses do?
Companies that use or plan to use the NID should:
- Use the correct published rates when calculating the deduction
- Check that their equity qualifies
- Review their structure to ensure they are benefiting properly
Using the NID correctly can reduce tax, but it is important to follow the rules carefully.
How KSA Can Support You
At KSA, we help businesses understand and apply tax rules in a simple and practical way. Our team can assist you in calculating your NID, checking eligibility, and ensuring everything is done correctly.
Whether you are planning new investments or reviewing your current structure, we are here to support you.
Contact the KSA team for further assistance.
