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Reference Rates for 2019 for Notional Interest on Equity

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Reference Rates for 2019 for Notional Interest on Equity

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The Cyprus Tax Department published on 30 January 2019 an update on bond yield rates per country as at 31 December 2018 to be considered for the notional interest deduction for 2019 to which equity injected in to Cyprus companies is entitled. The rates are as follows:

Country

10 Year Bond Yield

Country

10 Year Bond Yield

Cyprus

2.302

Kazakhstan

N/A

Austria

0.484

Latvia

1.029

Armenia

6.385

Belarus (USD$)

7.226

Bulgaria

0.966

Luxembourg

0.522

BVI

N/A

Mauritius

5.380

France

0.705

Norway

1.754

Germany

0.284

South Africa

9.206

Switzerland

-0.197

Holland

0.383

Greece

4.346

Hungary

2.971

UAE

N/A

Ukraine (USD$)

10.780

United Kingdom

1.275

Poland

2.812

USA

2.685

Romania

4.811

India

7.261

Russia

8.720

Ireland

1.166

Russia (USD$)

5.020

Spain

1.413

Serbia

4.722

Italy

2.739

Slovakia

0.789

China

3.261

Croatia

2.415

Slovenia

1.166

Czech Republic

1.884

Sweden

0.457

Hong Kong

1.946

Canada

1.965

It is reminded that the reference interest rate is considered to be the higher of the 10-year government bond yield of Cyprus or of the country in which the assets financed by the new equity are utilized, plus 3%. The rate to be used is the one as at 31 December of the tax year preceding the tax year of assessment. So the minimum reference interest rate to be used for the tax year 2019 is 5,302% being the 2,302% yield on the 10-year government bond of Cyprus plus 3%, as provided by the relevant legislation.

It is also reminded that capitalization of existing liabilities, including back to back arrangements, obtained by a Cyprus company qualifies for the purposes of the notional interest deduction.


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