Cyprus -Ukraine amendment to the Double Tax Treaty – Detailed Analysis
On the 11th of December 2015, Cyprus and Ukraine signed a protocol amending the existing Convention for the Avoidance of Double Taxation (which was signed on 8th November 2012) and the prevention of fiscal evasion with respect to taxes on income and on capital. The provisions of the signed protocol will come into effect as of 1st January 2019 on the date when the existing Convention will expire.
The signed protocol is based on the OECD Model Tax Convention for the Avoidance of Double Taxation on Income and on Capital and contributes to the further development of the trade and economic links between Cyprus and Ukraine.
“Most favourable nation clause”
During the negotiations of the protocol the “most favourable nation clause” was granted, for taxes on interest, dividends, royalties and capital gains. This means that in case Ukraine enters into a double tax treaty agreement with another country which provides for more favourable provisions for dividends, interests, royalties and capital gains than those provided to Cyprus, the Double Tax Treaty between Cyprus and Ukraine will have to be amended to include these more favourable provisions.
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