Through an amendment approved by the Cyprus Parliament on 6 December 2023, the Special Contribution for Defence (SCD) rate on interest income has been reduced from 30% to 17%. The amendment was published in the Official Gazette of the Republic of Cyprus on 20 December 2023 and is effective as from 1 January 2024.
It is important to note that only passive interest income (any interest other than active interest) earned by Cyprus tax resident companies and Cyprus tax resident and domiciled individuals, is subject to SCD. Active interest income, which is interest derived from the ordinary carrying on of a business or closely connected to the ordinary course of a business, is not considered as passive interest and therefore it is not subject to SCD. Such interest income is subject to Income Tax.
