Amendments to Notional Interest Deduction (NID)

On 16 June 2020, the NID provisions have been amended as follows:

Reference rate

The reference rate is the yield of the 10 year government bond as at 31 December of the year preceding the tax year the NID is claimed, of the country where the new equity if employed OR invested plus 5%. There is no minimum reference rate.


New equity

This is defined as equity introduced into the business on or after 1 January 2015.

As from 1 January 2021, the NID can no longer be claimed on equity arising from the capitalization of pre-existing reserves.


NID cap

In accordance with the pre-amended provisions, the NID is capped at 80% of taxable profits. The amending law clarifies that for the purposes of calculating the NID cap, the relevant taxable profits are those arising from the employment of the new equity so that the NID can only be claimed against such profits.

The amendment also clarifies that the cap applies separately to the taxable profits derived from each business asset that is financed by the new equity.