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Double Tax Treaty amending protocol between Cyprus and Ukraine ratified.

The Cyprus-Ukraine income tax treaty signed on December 2015 was amended and by Ukrainian parliament on 30th October 2019. The new amended protocol is now in force and will take effect on 1st of January of 2020.

What are the main provisions of the amended protocol?


Withholding tax on gross interest of 5% will be applied (previous rate was 2%).

Capital gains.

Capital gains obtained by a resident of the country from the alienation of shares deriving more than 50% of their value directly or indirectly from real estate situated in the other country, may be taxed in that other country with certain exceptions. Any other disposal of shares is taxed in the country of the alienator provided that it is subject to tax in that State.


Withholding tax at 5% is applied on gross dividends if the beneficial owner is a company which holds at least 20% of the capital of the company paying the dividends and has invested at least € 100,000 in the acquisition of the shares or other rights of the company;

Withholding tax at 10% on gross dividends will apply in all other cases (replacing the previous rate of 15%).

Favoured nation clause.

The protocol provides that if Ukraine agrees, under a Treaty with another country, to grant an exemption from tax in Ukraine on dividends, interest or royalty payments arising in Ukraine, or apply lower rates of tax in Ukraine to such payments than those provided by the respective Articles of the Treaty, or to include more favourable provisions in Article 13 – Capital Gains, then the two countries have the right to renegotiate these Articles with a view to apply such exemption or lower rates to this Treaty.

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