On 13 March 2018, the Minister of Finance of Ukraine and the State Secretary for the Finance Ministry of the Netherlands signed the Protocol amending the Convention between the Kingdom of the Netherlands and Ukraine for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Property (the “Protocol”).

The Protocol reportedly revisits the withholding tax rates on core types of passive income, namely:

• eliminating the 0% tax rate on dividends and confirming the applicable rates of 5% (for shareholders owning at least 20% of the capital of the company paying the dividends) and 15% (for other shareholders);

• increasing the tax rate on interest from 2% to 5% (for qualified lendings) and confirming the general rate of 10% (for other lendings); and

• setting the tax rates on royalties at 5% and 10%, thus eliminating the currently applicable 0% tax rate.

The Protocol is also meant to significantly amend the convention’s information-exchange clause in line with the latest recommendations from the Organization for Economic Co-operation and Development in order to broaden the possibilities for exchanging fiscal information between the parties.

Ukraine and the Netherlands are yet to conduct all the domestic procedures necessary to ratify the Protocol and the date it will come into force has not been scheduled. However, it is not expected that the Protocol will become effective before 1 January 2019.


Information from Ministry of Finance of Ukraine from 13 March 2018 at https://www.kmu.gov.ua/ua/news/ukrayina-ta-korolivstvo-niderlandi-pidpisali-protokol-shodo-vnesennya-zmin-do-konvenciyi-pro-uniknennya-podvijnogo-opodatkuvannya (in Ukrainian)


Olexander Martinenko, Senior Partner, olexander.martinenko@cms-cmno.com

Viktoriia Stavchuk, Associate, viktoriia.stavchuk@cms-cmno.com

Anna Pogrebna, Partner, anna.pogrebna@cms-rrh.com