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Cyprus – Ukraine DTT

Cyprus – Ukraine DTT

19 September 2016 Tax Law

On December 11th 2015, Cyprus and Ukraine signed a protocol amending the existing convention for avoidance of double taxation which was signed on November 8th 2012. The provisions of the signed protocol will come into effect on January 1st 2019, the date of expiration of the existing convention.

The signed protocol is based on the OECD Model tax convention for avoidance of double taxation on income and on capital and contributes to the further development of the trade and economic links between Cyprus and Ukraine.

The main provisions of the protocol amending the DTT:

Dividends:

  • 5% withholding tax on dividends paid, if the beneficial owner of the dividends is a company holding at least 20% of the capital of the company paying the dividend and has invested at least €100,000 in the acquisition of shares;
  • 10% withholding tax on dividends paid in all other cases.

Interest:

  • 5% withholding tax

Capital gains:

Gains from the disposal of shares deriving at least 50% of their value from immovable property would be taxed in the country in which the immovable property is situated.

 

The following is a comparison between the existing treaty and the new treaty coming into effect on January 1st 2019:

 

Existing treaty

New treaty

Dividends

5% withholding tax on dividends paid, if the beneficial owner of the dividends is a company holding at least 20% of the capital of the company paying the dividend OR has invested at least €100.000 in the acquisition of shares; 15% withholding tax on dividends paid, in all other cases

5% withholding tax on dividends paid, if the beneficial owner of the dividends is a company holding at least 20% of the capital of the company paying the dividend AND has invested at least €100.000 in the acquisition of shares; 10% withholding tax on dividends paid, in all other cases

Interest

2% withholding tax

5% withholding tax

Royalties

5% withholding tax; 10% in case of royalties from films

5% withholding tax; 10% in case of royalties from films

Capital gains tax

Gains from the disposal of shares (irrespective of whether the gain arises mainly from immovable property in the books of the company) are taxed in the country of which the seller is resident.

Gains from the disposal of shares deriving at least 50% of their value from immovable property are taxed in the country in which the immovable property is situated (subject to exemptions).