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Ukraine and Austria sign protocol modifying their double tax treaty

Austria, Ukraine
25/06/2020
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On 15 June 2020, Ukraine's Minister of Finance Serhiy Marchenko signed a protocol modifying the Treaty between the Government of Ukraine and the Government of the Republic of Austria for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital.

Based on negotiations going back to 2016, the protocol brings the treaty’s provisions in compliance with the OECD Model Convention.

According to a press release from the Ukrainian Ministry of Finance, the protocol provides for the following changes in withholding tax rates for passive income:

  • Dividends – the maximum rate will increase from 10% to 15%; the reduced tax rate of 5% will remain intact and will apply to dividend recipients owning at least 10% in shareholdings;
  • Interest – the current minimum 2% rate will be increased to 5%;
  • Royalties – tax rates are increased from 5% to 10% on copyright royalties payable for literary and artistic works, including cinemagraphic films; and from 0% to 5% for scientific work, patent, trade mark, secret formula, processing, or for information concerning industrial, commercial or scientific endeavours.

The protocol also expands the exchange of tax information and introduces new provisions for the limitation of treaty benefits.

The exact wording of the protocol is not yet available. The protocol is expected to be ratified by both State parties in order to enter into force.

For more information on this protocol, Ukraine's double taxation treaty with Austria and other tax issues pertaining to Ukraine, contact your regular CMS advisor or local CMS experts: Olexander Martinenko, Anna Pogrebna.

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