The Notional Interest Deduction (NID) is one of the key tax mechanisms in Cyprus to reduce corporate taxation through notional interest. It applies when a company has capital (e.g., share premium).
What It Is:
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A deduction from taxable profits, as if the company were paying interest to itself
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Calculated on new equity (e.g., premium shares)
Example:
If a company has contributed €500,000 as share premium and the annual NID rate is 7%:
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Notional interest: €35,000
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If taxable income was €100,000 → reduced to €65,000
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Tax: €8,125 instead of €12,500
Want to see if your company can reduce taxes using NID? Request an analysis.
