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29 April 2016
The protocol amending the double tax agreement between Ukraine and Cyprus recently took a further step towards ratification with the announcement by Ukraine's Cabinet of Ministers that it approved the protocol on March 30 2016 and has forwarded it to Parliament for ratification.
The protocol was signed in December 2015 and will take effect on January 1 2019, provided that it is ratified by both countries before that date.(1)
The protocol limits Ukrainian withholding tax on dividends to 5% if the beneficial owner holds at least 20% of the shares in the company paying the dividend and has invested more than €100,000 in them. Otherwise, withholding tax is limited to 10%. The withholding tax on interest is limited to 5%. Cyprus does not impose withholding taxes on dividends or interest.
Gains from the sale of shares of property-rich companies (ie, companies in which 50% or more of the value derives from immovable property) may be taxed in the country in which the immovable property is located.
According to the Cyprus Ministry of Finance, the protocol also includes a 'most-favoured nation' commitment, whereby if Ukraine subsequently enters into a double tax agreement with any country containing more favourable provisions, the Cyprus-Ukraine agreement will be amended to match them.
For further information on this topic please contact Philippos Aristotelous at Andreas Neocleous & Co LLC by telephone (+357 25 110 000) or email (email@example.com). The Andreas Neocleous & Co LLC website can be accessed at www.neocleous.com.
(1) For further information please see "Protocol to double tax agreement between Cyprus and Ukraine signed".
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