ARTICLE · 19 NOVEMBER 2025

The Cyprus Notional Interest Deduction (NID)

Nikita & Partners Limited

Explore more from Nikita & Partners Limited

The Notional Interest Deduction (NID) is a tax incentive introduced by Cyprus in 2015 to encourage companies to finance their operations through equity rather than debt.

CyprusTax

Nikita & Partners

Introduction to Notional Interest Deduction (NID)

The Notional Interest Deduction (NID) is a tax incentive introduced by Cyprus in 2015 to encourage companies to finance their operations through equity rather than debt. It allows businesses to claim a notional deduction on taxable profits when raising capital via new equity, offering a tax advantage similar to interest deductions on debt financing.

By reducing the effective tax rate, NID enhances Cyprus's attractiveness as a business hub, promotes financial stability, and ensures tax neutrality between debt and equity financing.

Legal Framework of NID

The NID is legislated under Article 9B of the Cyprus Income Tax Law (ITL) and applies to:

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

Related Articles

The Financial Side Of Property Development In Cyprus

Michael Chambers & Co LLC

Application Of The Zero VAT Rate To Specified Goods Until 31 May 2027

Cyprus Remains The Leading Platform For Holding, Financing And IP Owning Structures

The Sovereign Group

OECD Updated Commentary On Article 5 (Permanent Establishment): When Does Use Of A Home Office Result In A Fixed Place Of Business Permanent Establishment?

Michael Kyprianou & Co. LLC

From 5 October, Your IBAN With The Cyprus Tax Department Changes Only Through Tax For All

CYAUSE Audit Services Ltd

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

Comparative Guide

Tax

Comparative Guide

Tax Disputes

See more popular content from

Tax

Cyprus Corporate Tax 2026: Frequently Asked Questions

Cyprus corporate tax changed materially on 1 January 2026. The headline change is the corporate tax rate, which rose from 12.5% to 15%. But the reform package went further, touching loss carry-forward..

Nikita & Partners Limited

Cyprus Tax Residency And Non-Domicile Status In 2026: Legal And Practical Considerations For International Business Owners

Cyprus has increasingly positioned itself as a jurisdiction of interest for entrepreneurs, international business owners, remote professionals and high-net-worth individuals seeking an EU base with a modern...

A. Danos & Associates LLC

Cyprus Tax Reform 2026: Key Changes For Individuals And Businesses

Cyprus approved a comprehensive tax reform package on 22 December 2025, marking the first major overhaul of the tax system in more than twenty years.

Michael Chambers & Co LLC

You Can Now Be Cyprus Tax Resident In 60 Days Even If Another Country Still Claims You

Cyprus removed a key barrier to its 60-day tax residency rule in January 2026, allowing applicants to qualify even if another country still claims them as tax resident. The change shifts the resolution of competing residency claims from domestic statute to double tax treaty tie-breaker provisions, fundamentally altering how internationally mobile business owners and executives can establish Cyprus tax residency.

CYAUSE Audit Services Ltd

Cyprus Corporate Tax Is Now 15%: Who Pays 8 Points Less, And Why Non-Doms Pay More

Cyprus has raised its corporate income tax rate from 12.5% to 15%, but the total tax burden on distributed profits has actually fallen by more than eight percentage points for Cyprus-domiciled shareholders due to a dramatic cut in the Special Contribution for Defence on dividends. However, non-domiciled residents and foreign shareholders now face higher effective rates, fundamentally reshaping the island's tax competitiveness for different investor categories.

CYAUSE Audit Services Ltd

Cyprus Personal Taxation: What Foreign Investors And Employees Need To Know Following The January 1, 2026 Tax Reform

The Cypriot tax landscape has undergone a significant recalibration following the entry into force of a broad package of fiscal reforms, effective as from the 1st of January, 2026.

Elias Neocleous & Co LLC

Cyprus Tax Residency: The Definitive Guide To The 60-Day Rule, Non-Dom Status, And Tax-Free Dividends (2026)

Cyprus tax residency has become the subject of intense interest among internationally mobile business owners and entrepreneurs. The reason is straightforward: Cyprus offers a legal, transparent, and well-tested framework...

Nikita & Partners Limited

0%, 5% Or 17%: Cyprus Now Decides Your Dividend Tax By Where The Shareholder Sits

Cyprus has fundamentally changed how it taxes outbound dividends, interest, and royalties paid to associated companies. Depending on where the receiving shareholder is located, the same payment can now attract 0%, 5%, or 17% withholding tax—or trigger a complete denial of the deduction. Most international groups have not yet reviewed their ownership structures against these new rules, which took effect on 1 January 2026 and apply automatically based on the recipient's jurisdiction.

CYAUSE Audit Services Ltd

Cyprus Capital Gains Tax On Shares: The Investor's Guide

A Cyprus resident company holding a portfolio of listed securities, funds, or bonds can generate capital gains and dividend income entirely free of corporation tax.

Nikita & Partners Limited

Cyprus Tax Reform 2026: Key Changes

On 22/12/2025, the House of Representatives approved a comprehensive package of tax amendments representing the most extensive reform of the Cypriot tax system in over two decades.

G. Vrikis & Associates LLC