Ukraine and the Netherlands sign amendments to tax treaty: dividends no longer exempt

On Monday, 12 March, Ukraine and the Netherlands signed an Amending Protocol (the Protocol) to the Double Tax Treaty between the two nations. According to an announcement made by the Ministry of Finance of Ukraine, the Protocol provides for certain significant changes in taxation of cross-border dividends, interest, and royalties.

Please note: No official text of the Protocol has been published yet. We will keep you informed on any changes in the document’s status. This report relies on the Ministry’s announcement.

Withholding tax (WHT)*


Reportedly, the Protocol will discontinue the withholding tax (WHT) exemption for dividends.

The exemption is currently available to a parent company (i) which owns at least 50% of the subsidiary’s equity on condition that at least USD 300,000 had been invested in the subsidiary’s equity, or (ii) whose investment to the subsidiary’s equity is guaranteed, or insured, by the Government, or the central bank, or government agency, or Government-owned or –controlled entity, of the parent’s state of tax residency.

After cancellation of the exemption, businesses may still enjoy a reduced WHT rate of 5%, which will continue to be available to any parent company owning at least 20% of the subsidiary’s equity, which is a beneficial owner of the dividends.


Thereduced WHT rate will increase from 2% to 5% for interest related to (i) loans provided by financial institutions (such as banks or insurance companies) and (ii) sales of equipment and machinery on credit.

For other cases, a reduced rate of 10% will remain available.


Current WHT exemption for royalties related to certain items of intellectual property (e.g. copyrights on scientific works, patents, design or know how) will also be removed and replaced with a 5% WHT rate. Royalties paid in respect of copyright of literature or artistic work will continue to be taxed at a reduced rate of 10%.

* – standard statutory rates of WHT are 15% in both Ukraine and the Netherlands (the latter, however, does not currently levy WHT on interest and royalties.)

Other changes

Among other changes, amendments are to be made in the Exchange of Information clause. It can be expected that the changes will align the wording of the clause with the latest version of the OECD Model Tax Convention.

The Protocol is subject to ratification procedures in both states.

Should you need any assistance regarding this report, please contact Serhiy Verlanov or Konstantin Penskoy.

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