Reference rates for notional interest deduction for 2019

Article 9(B) of the Income Tax Law 2002 (as amended) provides for a notional interest deduction for tax purposes on new equity capital (paid-up share capital and share premium) injected into companies and permanent establishments of foreign companies on or after 1 January 1 2015 to finance business assets, calculated by applying a reference rate to the new equity.

The reference rate is the higher of the 10-year government bond yield of Cyprus or the country in which the assets funded by the new equity are used, in each case plus three percentage points. The bond yield rates to be used are as of December 31 of the year preceding the year of assessment.

The Tax Department has now announced the 10-year government bond yields as of 31 December 2018, which will be used as the basis for the notional interest deduction for the 2019 tax year, for the following countries.

  10-year bond rate Reference rate for 2019
Armenia 6.385 9.385
Austria 0.484 5.302
Belarus (USD) 7.226 10.226
British Virgin Islands N/A 5.302
Bulgaria 0.966 5.302
Canada 1.965 5.302
China 3.261 6.261
Croatia 2.415 5.415
Cyprus 2.302 5.302
Czech Republic 1.884 5.302
France 0.705 5.302
Germany 0.284 5.302
Greece 4.346 7.346
Hong Kong 1.946 5.302
Hungary 2.971 5.971
India 7.261 10.261
Ireland 1.166 5.302
Italy 2.739 5.739
Kazakhstan N/A 5.302
Latvia 1.029 5.302
Luxembourg 0.522 5.302
Mauritius 5.38 8.38
Netherlands 0.383 5.302
Norway 1.754 5.302
Poland 2.812 5.812
Romania 4.811 7.811
Russia 8.72 11.72
Russia (USD) 5.02 8.02
Serbia 4.722 7.722
Slovakia 0.789 5.302
Slovenia 1.166 5.302
South Africa 9.206 12.206
Spain 1.413 5.302
Sweden 0.457 5.302
Switzerland -0.197 5.302
Ukraine (USD) 10.78 13.78
United Kingdom 1.275 5.302
USA. 2.685 5.685