New Double Tax Treaty between Cyprus and Ukraine

On 8th of November during an official visit in Cyprus by the Ukrainian President Mr. Viktor Yanukovych, Cyprus and Ukraine signed the long waited Ukraine – Cyprus Double Tax Treaty. The new “DTT” comes to replace the old one (1982) between Cyprus and USSR, and will enter into effect on the 1st of January following the year in which Cyprus and Ukraine exchange notifications of ratification.

Epigrammatically, the most significant provisions of the new DTT are the following:

  1. Dividends – Article 10 (2)

By virtue of the a.10 (2) of the DTT the withholding tax rate on dividends, will be 5% of the grounds of the dividends if the beneficial owner holds at least 20% of the capital of the company paying the dividends or the investments in the acquisition of the shares or other rights of the company are equal of at least 100.000 EURO.

In all other cases the withholding tax rate will be the 15% of the gross amount of the dividends.

        2.   Interest – Article 11 (2)

The withholding tax rate on interest shall not exceed 2 % of the gross amount of the interest if received by the beneficial owner of the income.

        3.   Royalties - Article  12 (3) and (4)

Pursuant to the Article 12 and particularly the paragraphs 3 and 4 of the DTT, the withholding tax rate on royalties in respect of the payment of any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience shall be 5%. In all the other cases the withholding tax rate shall not exceed 10% if the payment received by the beneficial owner of the income.

        4.  Capital Gains - Article 13

Taxing rights with respect the disposal of shares or any other movable property is granted to the State in which the person making the disposal is tax resident.


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