• New Double Tax Treaty Between Cyprus and Ukraine
  • November 12, 2012
  • Law Firm: Andreas P. Demetriades Associates - Advocates Legal Tax Consultants - Law Firm - Nicosia Office
  • A new Double Tax Treaty between Cyprus and Ukraine, which will replace the old Treaty with the USSR, was signed on 8 November 2012 by representatives of the two countries during an official visit of the President of Ukraine Mr.Viktor Yanukovych in Cyprus.

    The Treaty will enter into effect on 1 January 2013 following the year in which the parties exchange notifications of ratification.

    The most significant provisions of the Treaty are highlighted below:

    With respect to the definition of a permanent establishment, language from the model OECD Treaty has been incorporated.

    In particular, under the Treaty a building site or construction or installation project or any supervisory activities in connection with such site or project constitutes a permanent establishment only if it lasts more than 12 months.

    The withholding tax rate on dividends is 5% if the Beneficial owner holds at least 20% of the Capital of the dividend paying company or has invested in the acquisition of shares or other rights of the dividend paying company of at least €100,000.

    In all other cases the withholding tax rate is 15%.

    The withholding tax rate on interest is 2%.

    The withholding tax rate on Royalties in respect of any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience is 5%, and 10% in all other cases.

    Taxing rights with respect to capital gains arising from a disposal of shares (irrespective of the underlying assets of the company in which the shares are being disposed of) or any other movable property is granted to the State in which the person making the disposal is tax resident.

    In any case, payments of dividends and interest from a Cyprus Company to its non-Cyprus tax resident Owners, irrespective of the above, there are no withholdings.