New opportunities for business cooperation between Luxembourg and Ukraine
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

New opportunities for business cooperation between Luxembourg and Ukraine

intl-updates

ITR's Luxembourg correspondent Deloitte examines the Luxembourg-Ukraine tax treaty, highlighting the available benefits for businesses.

The 1997 tax treaty between Luxembourg and Ukraine entered into effect on January 1 2018, which should facilitate business and economic cooperation between the two countries. The treaty and the accompanying protocol provide for the following reduced withholding tax rates on dividends, interest and royalties paid by one of the contracting states to a resident of the other contracting state:

  • Dividends: A 5% withholding tax applies to dividends paid to a company that is deemed to be the beneficial owner of the income and that holds at least 20% of capital of the company paying the dividends; otherwise, the rate is 15%.

  • Interest: A 5% withholding tax rate applies to interest paid on a loan granted by a bank or other financial institution provided the recipient of the interest is considered the beneficial owner of the income; the rate on all other loans is 10%.

  • Royalties: A 5% rate applies to royalties relating to patents, trademarks, designs or models, plans, secret formulas or processes, or for information (know-how) concerning industrial, commercial or scientific experience paid to a beneficial owner. The rate is 10% where the royalties are paid in respect of a copyright of literary, artistic or scientific work and are received by a beneficial owner.

Ukraine is also expected to sign the OECD multilateral instrument (MLI) in the near future, and once the MLI becomes effective, the treaty between Luxembourg and Ukraine will be amended to incorporate the tax avoidance measures envisaged in the MLI to the extent both countries designate the treaty as being covered by the MLI.

In addition, Ukraine has implemented several reforms in recent years and has substantially strengthened its economic ties with the EU, such as by signing the association agreement with the EU that took effect on September 1 2017, which was an important milestone for the country to follow the pro-European course and remove trade barriers with the EU. Most recently, the Chamber of Commerce of the Grand Duchy of Luxembourg, together with AWEX (the Walloon Export and Foreign Investment Agency) has organised a multi-sectoral trade mission to Ukraine where representatives participated in business-to-business meetings and discussed opportunities for further cooperation between Luxembourg and Ukraine.

prijot.jpg
krasnopeeva.jpg

Henri

Prijot

Olga

Krasnopeeva

Henri Prijot (hprijot@deloitte.lu), Olga Krasnopeeva (okrasnopeeva@deloitte.lu) and Valeria Glotova (vaglotova@deloitte.lu)

Deloitte Luxembourg

Website: www.deloitte.com/lu

more across site & bottom lb ros

More from across our site

KPMG Netherlands’ former head of assurance also received a permanent bar and $150,000 fine; in other news, asset management firm BlackRock lost a $13.5bn UK tax appeal
The new, fully integrated office will also offer M&A, dispute resolution, IP and corporate tax services
The new guidance concerns a recent 1% excise tax on the repurchases of corporate stock for both US and certain foreign companies
Interpath has hired a managing partner from rival accounting firm BDO to lead the new operation
Survey results of over 28,000 in-house lawyers reveal that American in-house counsel place a higher value on the reputation of external advisers than their peers elsewhere
In an exclusive interview with ITR, Andrew Leigh also endorsed new legislation designed to prevent multinationals using complex corporate structures to reduce taxes
The finalists for the 13th annual awards revealed
Nick Crama and Parwesh Bissumbhar, senior director and manager respectively at Alvarez & Marsal, outline practical advice for real estate managers to comply with DAC6 regulations
Survey results of over 25,000 in-house lawyers show competitive pricing and transparency in billing practices can help firms win clients
The new tech partnership will assist clients worldwide with pillar two; in other news, UK accountancy firm MHA completes a regional merger
Gift this article