Amended Cyprus-Ukraine Double Tax Avoidance Agreement

On Friday 11th of December 2015,  Cyprus and Ukraine signed a double taxation avoidance protocol in Kiev.  This protocol amends the current  double tax avoidance convention that is in place since 1st of January 2014. The said protocol is expected to enter into force no earlier than 1st of January 2019, the date at which the current treaty will stop being valid .

According to the Cypriot minister of finance, “a most favorable nation clause has been agreed for the taxes on interest, dividends, royalties and capital gains, ensuring that Cyprus is treated no less favorably than any other of Ukraine’s double taxation agreement counterparties in the future”.

The new  protocol is founded on the OECD model tax convention for the avoidance of double taxation on income and on capital. The terms of the protocol regarding  taxes on dividends, interest and capital gains, are being described in short  herebelow . The following terms derive from the website of the Ukrainian Ministry of Finance.


The standard withholding tax rate to apply on dividends paid by Ukrainian companies to Cypriot shareholders is 15%, with the rate eliminated to 5% given  that:

1) The beneficial owner owns more than 20% of the share capital of the company paying the dividend, and

2) The beneficial owner has invested more than €100,000 in the shares.


The withholding tax rate paid by a Ukrainian debtor to the beneficial owner is Cyprus is 5%.

Capital gains

Capital gains acquired  from movable property – including shares in “property-rich” companies- are subject to taxation  both in the country in which the immovable property is situated as well as in the country of residence of the person making the disposal.

Final remarks

Subject to ratification by both Cyprus and Ukraine, the new protocol provides a basis for the current  DTA to continue until at least 1 January 2019, that is  the earliest date on which the protocol may enter into force. While the protocol provides sort of eliminated  benefits after that date compared with the current DTA the “most favoured nation” provision means that they will be at least as attractive as under any other  of  Ukraine’s DTAs.

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