Loan and Interest for the Loan Tax Laws Improved in Cyprus to Reinforce the Cyprus Holding Facilities
In March 2012, the Cyprus House of Representatives changed the interest tax legislation, thus facilitating the use of the loan agreements within a tax group and the deductibility of the interest in some cases.
1. After March 2012, any loans between a Cyprus mother company and its daughter company in which it owned 100 % shares may be given without any interest, unlike until recently, when it had to bear a market rate interest.
2. In case of direct or indirect acquisition of 100% shares in a subsidiary the interest for the received loans for such an acquisition are now deductable, thus reinforcing the Cyprus jurisdiction as the most attractive for “Holding” services. In case that the subsidiary own some assets, which may considered not to be necessary for the business activity of the company, the possibility to deduct the interest will be in a percent, corresponding to the assets which are actually used in the business of the said company.