New Protocol signed to the Austria-Ukraine DTT
On 15 June Ukraine and Austria signed additional Protocol to Double Tax Treaty between Ukraine and Austria. In general, it increases withholding tax rates.
Here is the more detailed overview
On 15 June, 2020, the Minister of Finance, Sergei Marchenko, signed a Protocol amending the Convention between the Government of Ukraine and the Government of the Republic of Austria on avoidance of double taxation and prevention of tax evasion regarding taxes on income and property (hereinafter - the Convention).
The specified Protocol amends the Convention to bring its provisions in line with the OECD Model Convention.
The Protocol envisages, in particular, the increase in tax rates dividends from 10% to 15% and interest at 2% to 5%. The withholding tax rates for royalties will be also increased:
• for the use of any copyright of scientific work, patent, etc. - from 0% to 5%, and
• for the use of copyright of literary works or works of art - from 5% to 10%.
Entitlement to benefit
In addition to increasing withholding tax rates, the Protocol introduces new provisions:
• "Entitlement to benefit", which denies the application of benefits under the Convention if the main purpose of structure or transaction is the obtaining of such benefits, and
• "Exchange of information", which extends the capabilities of the competent authorities of the Contracting States shall exchange tax information.
This will undoubtedly will increase capacities of the Ukrainian tax authorities to investigate and challenge transactions which they will find aggressive or not in line with purpose of DTT with Austria otherwise.
Relevant businesses are advised to evaluate the changes and assess its impact with tax professionals.
How AC Crowe Ukraine and Crowe Vanas (Austria) can help you and your clients?
• We can analyse your structure to identify tax risks related to amendment of double tax treaty between Ukraine and Austria.
• We can benchmark your structure against the structures and characteristics of comparable groups.