Taxation of Interest

  • Interest earned from financing activities is taxed as ordinary business income at a rate of 10% (after deducting all business expenses). A very low profit margin of as little as 0,35% is acceptable for tax purposes which it can decreased up to 0,125%. This legislation makes Cyprus financing companies very attractive. Also group companies can benefit from this legislation since the low margins are acceptable for financing group companies.
  • If interest does not qualify as business income then it is subject to SDC at a rate of 10%