On 08 November 2012 Cyprus and Ukraine signed a new double taxation treaty, replacing the old convention of 1982 concluded with USSR.
According to the principle terms of the Treaty, the withholding tax on dividends is set at 5%, provided that participation in the company’s capital exceeds 20% or 100 000 euro. For all other cases, the tax rate is set at 15%.
The withholding tax rate on interest is 2%.
The withholding tax rate on royalties is principally 5%.
Capital gains tax arising from a disposal of shares or any other movable property is taxed only by the country in which the person making the disposal is tax resident.
The effect of the new double tax treaty is subject to ratification by both countries.
This new development is expected to enhance the economic links between the two countries and facilitate international investments in Ukraine.