Special Defence Contribution (SDC) reduced rate of 3%
Effective from 8 June 2022, the reduced rate of 3% will apply to both Cyprus tax resident domiciled individuals and Cyprus tax resident legal entities on interest received from savings certificates and development bonds of the Republic of Cyprus or any other EU member State, corporate bonds listed on a recognised Stock Exchange and interest that is received or credited by a pension fund, a local authority, a public entity or a semi-government Organisation, a provident fund or the social insurance fund.
It should be noted that 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 interest and therefore it does not fall within the provisions of the SDC law and is therefore taxed under the Income Tax Law.
Before the application of relevant law, the reduced rate of 3% was applicable only to interest income received by Cyprus tax resident domiciled individuals only.
