Cyprus Publishes 10-Year Government Bond Yields for NID Calculation for the 2026 Tax Year
The Cyprus Tax Department has published the yields on 10-year government bonds as of December 31, 2025. These rates are used for calculating the Notional Interest Deduction (NID) for the 2026 tax year.
The publication of these rates is particularly relevant for companies financed through new equity, as it directly affects the amount of available tax deduction and, consequently, the effective tax burden in Cyprus.
What is NID?
The Notional Interest Deduction (NID) is a tax incentive mechanism that allows Cyprus companies to claim a notional interest deduction on new equity introduced into the business. It is designed to align the tax treatment of equity financing with that of debt financing.
How is NID calculated?
The calculation is based on the following formula:
10-year government bond yield of the country where the capital is employed + 5%
The calculation relies on the official rates published by the Cyprus Tax Department at the end of the preceding year.
Practical Implications for Businesses
For companies raising capital through equity contributions, the applicable rates play a key role in tax planning.
The NID directly impacts:
Timely consideration of the updated rates allows businesses to optimize their tax position and improve financial efficiency.
