info@chambers.law
+357 25 81 99 66

Double taxation agreement between Cyprus and Ukraine just signed

The services of Michael Chambers & Co. LLC are available also in Russian.

The Cyprus taxation scheme together with the simple bureaucratic procedures motivates business people and investors to launch their business activities in Cyprus. In addition, Cyprus maintains double tax treaties with more than 40 countries. Recently, the Minister of Finance of the Republic of Cyprus together with his Ukrainian counterpart launched a Protocol that will amend the current double tax treaty between the two countries, signed in 2012.

The corporate team of Michael Chambers & Co. LLC would like to inform you that the particular Protocol signed between the two Financial Ministers will enter into force no earlier than the 1st of January 2019.  In this point, Michael Chambers and his team would like to clarify that the Convention signed in November 2012 entered into force on the 1st of January 2014.

As a result of this Protocol, the economic and trade bonds between the two countries will be further developed. Furthermore, this development will lead to the emergence of new business and investment opportunities. The corporate team of Michael Chambers & Co. LLC will assist you in every step and offer optimal solutions for your business and investment plans. Note that the legal and administrative services of Michael Chambers & Co. LLC are available also in Russian.

Main provisions of the agreement:

The agreement takes into consideration taxes on interests, dividends, royalties and capital gains. The Cyprus tax legislation together with this Protocol establishes Cyprus as one of the most optimal choices for Ukrainian business people and investors. Michael Chambers & Co. LLC may provide you a tailor-made service that will fit your business and investment plans.

The corporate lawyers of Michael Chambers & Co. LLC inform you about the main provisions of the Protocol.

·         TAXES ON INTERESTS

Following the existing Convention, the withholding tax on interest paid by a Ukrainian debtor to a beneficial owner who is based in Cyprus is 2%. Once the Protocol enters into force, this particular rate will be augmented to 5%.

·         DIVIDENDS

The current double tax agreement offers for a withholding tax of 15% on dividends paid by Ukrainian companies to Cypriot shareholders, a reduced rate of 5% in case the beneficial owner owes more than 20% of the share capital of the company that pays the dividend or has invested more than €100,000 in shares. Based on this protocol, a lower tax rate will apply only if both conditions are satisfied.

·         ROYALTIES

Following the provisions of the Treaty, the withholding tax rate is 5% for royalties related to scientific work, patent, trademark, the process of information regarding industrial, commercial or scientific experience. The withholding tax of 10% applies to other royalties.

·         CAPITAL GAINS

The current Treaty implies that capital gains coming from movable property (including shares in property/ rich companies), whose assets embed mainly immovable property are taxable only in the country of residence of the individual who makes the disposal. Once the Protocol enters into force, profits on shares in property/ rich companies will be taxable in the country where the immovable property is located as well.

The corporate lawyers of Michael Chambers & Co. LLC stress that the current Convention facilitates the elimination of double taxation by providing a tax credit method of tax relief.

Contact us and invest in Cyprus:

The corporate lawyers of Michael Chambers & Co. LLC are able to provide you an adequate legal and administrative support regarding investment and tax schemes in Cyprus. The corporate team of Michael Chambers & Co. LLC provides tailor-made information and support that will correspond to the needs of the client. Apart from English and Greek, our services are available also in Russian. If you wish to speak to one of our corporate lawyers, then please contact us: info@chambers.law