As of the 26th May 2022, the Cyprus Parliament
approved amendments to the Special Defence
Contribution ("SDC") Law, whereby the SDC has been lowered to the rate of three percent (3%) relating to interest income which is derived by or from certain sources.
According to the new provisions of the Law, the reduced rate will apply to both legal entities and individuals, in cases where the interest is received or credited from:
- savingscertificates and development bonds of the Republic ofCyprus or any other State;
- corporate bonds listed on arecognized Stock Exchange; and
- bonds that are listedon a recognized Stock Exchange and were issued by aGovernmental Authority or Organization, as well as tointerest that is received or credited by a Pension fund,a Governmental Authority or Organization, a Providentfund orthe Social Insurance Fund.
It should be noted that any interest income derived from the ordinary carrying on of a business is not treated as interest subject to SDC, but instead as business profit and is therefore subject to income tax, and therefore it does not fall within the provisions of the Law discussed above.
The above amendments shall become enforceable on the date of publication of the Law in the Official Gazette of the Republic
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.