13 Apr Defence Tax on Passive Interest Income
Reduction of defence tax on passive interest income
The Cyprus Parliament approved on 6 December 2023 an amendment to the
Special Defence Contribution Law, through which the special contribution for
defence rate on passive interest income earned by Cypriot tax residents
(individuals and companies) is reduced from 30% to 17%.
The amendment was published in the official Cyprus Government Gazette on 20
December 2023 and is effective as from 1 January 2024.
Active interest income derived from the ordinary carrying on of a business or closely
connected with the ordinary carrying on of a business is not considered as passive
interest and therefore it does not fall within the provisions of the special contribution
for defence law. Such interest income is subject to the provisions of the income tax
legislation.