Notional Interest Deduction (NID)

• Notional Interest Deduction utilized and applied effectively can substantially lower a Cyprus company's tax burden.
• Cost of equity financing is now tax deductible through the NID benefit. 
• Achieve an effective tax rate of 2.5% instead of 12.5%.

What is Notional Interest Deduction? 

It is deemed interest applied on 'new equity' injected into a company. It enables eligible companies to claim a tax deduction on new capital (equity) introduced into the company. A 'notional' interest expense is deducted from the company's taxable income. This means that properly managed and structured a company's corporation tax duty can be dropped from 12.5% to as low as 2.5% making the company a substantial saving in corporation tax.