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Ukraine, Netherlands ratify protocol amending Convention on double taxation avoidance

Royalty taxation shall be set at 5% and 10%.
11:51, 13 March 2018

Open source

The tax rate is being raised from 2% to 5%, while the zero taxation of dividends and royalty payments are being abolished. Such are the main changes in the Convention between Ukraine and the Kingdom of the Netherlands on double taxation avoidance and prevention of tax evasion regarding income tax and property tax that are specified in the protocol, Interfax-Ukraine reports.

Related: Ukraine’s Foreign Minister to go on working visit to the Netherlands on Feb. 1,2 with

The document was signed on Monday in the Netherlands by the Ukrainian Finance Minister Olexandr Danyliuk and the State Secretary for the Finance Ministry of the Netherlands Menno Snel, the Ukrainian institution has informed.

“Our next step is for the Ukrainian Parliament to ratify the protocol”, - Ukraine’s Minister of Finance Olexandr Danyliuk wrote on his Facebook page.

According to the press release published by the Ministry of Finance, the protocol introduces taxation of dividends at the rate of 5%, if the real owner of the dividends is the company owning at least 20% of the capital of the corporation paying the dividends, and taxation at the 15% rate in all other cases.

Related: Ukrainian parliament ratifies the Double Taxation Convention with Luxembourg

Royalty taxation shall be set at 5% and 10%. Other changes include the expansion of the parties’ capability to exchange taxation data.

The Ministry of Finance reminds that the draft protocol was prepared during the talks in Hague in April 2016, and its provisions fully comply with the OECD Model Convention and the OECD newest standards pertaining to the prevention of taxable base erosion and profit shifting.

The Ukrainian institution expects the changes to allow the prevention of tax evasion with a simultaneous easing of pressure on law-abiding taxpayers and to minimize taxation discrimination. Apart from that, the protocol provides for the creation of mechanisms to facilitate the cooperation between the Ukrainian and the Dutch tax authorities through setting procedures of cooperation on controversial issues.

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