Cyprus: Reduction of the special contribution rate for defense

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The rate of the special defense contribution on interest income received by natural persons domiciled for tax purposes in Cyprus from corporate bonds has been reduced from 30% to 3%.

The above amendment to the Special Contribution for the Defense Law (“the Law”) was published in the Government Official Gazette on June 26, 2019.

In accordance with the amendment to the law, which entered into force on the same day, the applicable tax rate on passive interest income received by natural persons domiciled for tax purposes in Cyprus from corporate bonds is reduced from 30% to 3 %.

The reduced rate is now in line with the SDC rate applicable to interest received on government bonds.

Individuals tax resident in Cyprus and not domiciled are not affected by the above change.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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