Ukraine and Switzerland amend the agreement on the avoidance of double taxation


On 24 January 2019, Ukraine's Minister of Finance and the President of Switzerland signed a Protocol on amendments to the Convention between Government of Ukraine and Government of Switzerland on Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital (the "Protocol").

The Protocol reportedly provides for the following amendments:

  • sets a 5% withholding tax rate on interest and royalty (that previously was 0%);
  • introduces new article on the mutual agreement procedure which allows for the use of arbitration;
  • revises the article on exchange of fiscal information without reservation regarding national tax interests and banking secrecy; and
  • addresses tax treaty shopping (Action 6 of the BEPS project) by introduction of the Limitation of Benefits (LOB) clause.

Ukraine and Switzerland are yet to conduct all the necessary domestic procedures to ratify the Protocol, and the date of entry into force is difficult to predict. However, we do not expect that the Protocol will enter into force earlier than 1 January 2020.

For more information on this Protocol and how it could affect your business, please contact our local experts.

Source: Information from Ministry of Finance of Ukraine from 24 January 2019 (in Ukrainian)