Ukraine and Cyprus have made changes to the convention for the avoidance of double taxation.
Ukraine and Cyprus have agreed to amend the bilateral convention on the avoidance of double taxation and the prevention of Tax Evasion with respect to Taxes on Income.
The sides signed an intergovernmental agreement on cooperation in the field of higher education, a Memorandum of Understanding between the State Agency of Ukraine for Energy Efficiency and the Ministry of Energy, Trade, Industry and Tourism of Cyprus in the field of renewable energy and energy efficiency.
Also, an agreement was signed on cooperation in the field of archives.
As reported July 21, 2015 Ministry of Finance has agreed with the Republic of Cyprus to raise tax rates of certain types of passive income. The corresponding decision was reached in the second round of negotiations July 2, 2015, and recorded in an appropriate protocol.
Thus, the Ministry of Finance has agreed with the Government of Cyprus to sign the new Convention for the avoidance of double taxation, which is consistent with the recommendations of the OECD (Organization for Economic Cooperation and Development).
According to the agreement, from taxation in Ukraine will be exempt only those revenues that are derived by a resident of Cyprus as a result of the alienation of shares or other corporate rights, more than 50% of which are directly or indirectly related to real estate located in the territory of Ukraine.
While the Ministry of Finance said that currently the only requirement for exemption from taxation of income as a result of the alienation of property of residents of Cyprus is the location of the property on the territory of Ukraine.
In addition, to be eligible to use a 5% tax on dividends, the taxpayer will be required to own a 20% stake in the company and invest in its registered capital of not less than EUR100 thousand., While currently sufficient to meet only one of these conditions.
The parties also agreed to raise the tax when paying interest to 5% from 2%.
In case of signing the text of the new Convention and its ratification by the parliaments of Ukraine and the Republic of Cyprus, the new conditions of taxation of passive income will take effect no earlier than January 1, 2019.
