English (United Kingdom)

The new Protocol to the Double Tax Treaty between Cyprus and Ukraine was agreed back in 2015 and was ratified by the Cyprus Government on 11 December 2015.

On 30 October 2019, the Ukrainian Parliament approved the ratification of the protocol.

Thus, the Protocol is now in force and will be in effect on 1 January 2020.

The main amendments effected by the Protocol to the existing treaty cover dividends, interest and capital gains resulting from the sale of shares of immovable property rich companies, as follows:

 

Dividends

5% tax rate applies if both criteria are met: (1) the beneficial owner of the dividends is a company (other than a partnership) which holds directly at least 20% of the capital of the company paying the dividends and (2) invested in the acquisition of the shares or other rights of the company equivalent of at least EUR 100,000. In all other cases 10% withholding tax rate is applied.

 

Interest

The withholding tax rate on interest of 2% is increased to 5%.

 

Capital gains

If gains derived by a resident of a Contracting State from the alienation of shares derive more than 50% of their value directly or indirectly from immovable property situated in the other Contracting State (e.g. Ukraine), such dividends may be taxed in that other State (e.g. Ukraine).

Subject to certain exceptions, such dividends may not be taxed in the other State where the immovable property is situated (e.g. Ukraine). These exceptions include the sale of shares listed on approved stock exchanges, and gains derived in the course of a corporate reorganization, or the business is carried on in immovable property from which the shares derived their value etc.

Any other gains from alienation of other property (e.g., shares that do not derive more than 50% of their value directly or indirectly from immovable property) will be taxable only in the Contracting State of which the alienator is a resident provided that those gains are subject to tax in that Contracting State.

 

Most Favoured Nation clause

According to Article 4 of the Protocol if, after 2 July 2015, Ukraine agrees under a double tax treaty with another country:

(a) to grant an exemption from tax in Ukraine on dividends, interest or royalties paid from Ukraine, or

(b) to apply lower rates of tax in Ukraine to such payments than those corresponding rates of Ukrainian tax than those provided in the double tax treaty between Cyprus and Ukraine, or

(c) to include more favourable provisions in Article 13 relating to capital gains,

then the two States have the right to renegotiate the same exemption or reduction in rates to the double tax treaty between Cyprus and Ukraine.

You can contact Globalserve for more information and clarification needed.

 

Provisional Tax

We would like to kindly remind you that the second and final installment of your computed provisional tax is due for settlement with the Tax Department by 31st December 2018.

Estimated taxable income can be revised (upwards/downwards) by submitting a revised Temporary Tax Return any time prior to 31st of December of the tax year.

 

You can contact Globalserve for more information and clarification needed.

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CYPRUS TAX CALENDAR 2019 IN ENGLISH & GREEK