On 14 March 2017 the Ukrainian Parliament ratified the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital with the Grand Duchy of Luxembourg (the "Treaty") and the Protocol to it.

It is expected that the withholding tax limitations to be applicable to the passive types of income in the state of source will be as follows:

  1. Dividends – 15% general rate; or 5% reduced rate applying if the dividend recipient is a company (other than a partnership) holding directly at least 20% of the capital in the company distributing the dividends;
  2. Interest – 10% general rate; or 5% reduced rate applicable to interest paid on loans granted by banks or other financial institutions;
  3. Royalties – 10% general rate; or 5% reduced rate that applies to royalties payable for the rights to use trademarks, patents, designs, models, secret formulas, or know-how. 

Also, the Treaty is expected to set up between Ukraine and Luxembourg the recent version of OECD provisions on the information exchange.

The Treaty will come into force once the parties exchange the instruments of ratification, while its provisions will apply to income derived the next year after such exchange.

For further information please contact Asters' partner Constantin Solyar
senior associate Maryna Golovko and junior associate Roman Podzizei.

© Asters 2017

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