A new Double Tax Treaty has been signed between Cyprus and Ukraine on 8 November 2012. The treaty will replace the existing treaty between Cyprus - Former USSR Income and Capital Tax Treaty of 1982 which were applicable.
The treaty will enter into effect on 1 January following the year in which the parties exchange notifications of ratification.
The major provisions of the new treaty are outlined below:
- Withholding taxes on dividends will be 5% if the owner owns at least 20% of the capital of the company paying the dividends or has invested at least €100,000 in the capital of the company and 15% in all other cases.
- Withholding taxes on interest is 2%
- Withholding taxes on royalties are 5% with respect to royalties of copyright of scientific work, patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience and 10% in all other cases.
- Capital gains arising from the disposal of immovable property (including shares) will be taxed in the country in which the person making the disposal is tax resident (irrespective of the location of the underlying assets being disposed of).