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Amendment of the Convention for the Elimination of Double Taxation

On 15.06.2021 the Verkhovna Rada ratified the Protocol of 12.03.2018 On amendments to the Convention between Ukraine and the Kingdom of the Netherlands for the elimination of double taxation and the prevention of tax evasion with respect to taxes on income and property, in force since November 1996.

The protocol provides for the following changes:

– taxation of dividends at the rate of 5% (previously it was 0%) – if the actual owner of the dividends is a company (other than a partnership), which directly owns less than 20% of the capital of the company paying the dividend, and 15% – in all other cases (remains unchanged);

– an increase in the size of the tax rate of interest – from 2% to 5%;

– an increase in the rate of taxation of royalties paid for the use or right to use any copyright of a scientific work or patent, trademark, design or model, secret formula or process, or for information concerning industrial, commercial or scientific experience, from 0% to 5%;

– a new version of the article on exchange of information, which provides for a significant increase in the ability of the competent authorities of the contracting states to exchange tax information;

– the inclusion in the text of a rule on the “Principal Purpose Test,” according to which the Convention benefits shall not be granted if obtaining the benefit was the main purpose of the treaty or transaction.

The Protocol will enter into force on the last day of the month following the month in which the exchange of ratification documents takes place, and the new tax rates will apply as of January 1 of the year following the year in which the Protocol comes into force. We will monitor the situation as it develops.