Double Tax Treaties with Ukraine for Foreign Companies
A double taxation treaty with Ukraine can reduce or eliminate withholding tax on Ukraine-source payments. Relief requires an in-force treaty, correct income classification, a valid residence certificate before payment and, where the treaty article requires it, confirmation of beneficial ownership.
Dividends to a foreign parent, interest to a foreign lender, royalties abroad, rent and service fees each require a separate Ukrainian tax assessment. The payer must determine whether withholding applies and which rate governs the payment.
This overview is addressed to foreign companies, their CFOs, tax advisers, and legal teams dealing with Ukrainian-source income — whether as shareholders of a Ukrainian subsidiary, lenders to a Ukrainian borrower, or licensors of intellectual property used in Ukraine.
1. Treaty priority under Ukrainian law
2. Ukrainian withholding tax on non-resident income
3. Conditions for treaty relief
4. Tax residence certificate
5. Beneficial ownership and intermediary structures
6. Permanent establishment risk in Ukraine
7. Common reasons treaty relief fails
8. Checklist before a cross-border payment
9. Ukraine’s treaty network
Frequently asked questions
How DLF can help
1. Treaty priority under Ukrainian law
A double taxation treaty is a bilateral international agreement between Ukraine and another state, ratified by the Verkhovna Rada of Ukraine. The Ukrainian Tax Code gives a ratified international treaty priority over conflicting provisions of the Code. A Ukrainian payer should therefore apply the relevant treaty rate or exemption when the treaty conditions and Ukrainian documentary requirements are met.
Treaties allocate taxing rights over dividends, interest, royalties, business profits, services income and real property. For each type of income, they allocate taxing rights between states and set the maximum tax rate that may be levied in the state of source. Depending on the provisions of a particular agreement, this rate may be reduced (to below 15%) or set at zero.
2. Ukrainian withholding tax on non-resident income
Where no treaty applies, or where treaty conditions are not met, the Ukrainian Tax Code imposes withholding at a standard rate. For most Ukraine-source income paid by a Ukrainian entity to a non-resident, the standard domestic withholding tax rate is 15% of the payment. Relevant categories include dividends, interest, royalties, lease and rental payments, income from engineering services, and income from transactions involving Ukrainian real property. The Tax Code qualifies this rate with the phrase “unless otherwise provided by the international treaties of Ukraine.”
The Ukrainian payer must withhold tax at the time of payment. Any overpayment can be recovered only through a separate refund procedure.
3. Conditions for treaty relief
Treaty relief requires the conditions relevant to the specific income type and treaty article to be satisfied together.
| Condition | What it requires |
|---|---|
| Treaty in force | A ratified double taxation treaty between Ukraine and the foreign company’s country of residence |
| Beneficial ownership | Where required by the relevant treaty article, the foreign company is the beneficial owner of the income, not an agent, nominee, or conduit |
| Residence certificate | A valid certificate issued by the competent authority of the foreign country, provided before the payment date |
Where all three are met, the Ukrainian payer applies the treaty rate, or exemption, at source, without prior approval from the State Tax Service. Relief is delivered at the point of payment rather than through a subsequent refund claim.
Anti-abuse rules. The OECD Multilateral Convention (MLI) modifies a treaty only where both jurisdictions’ positions match and the relevant provisions are effective. Separately, the Ukrainian Tax Code may deny relief where obtaining treaty benefits was the main or predominant purpose of the transaction and granting them would conflict with the treaty’s object and purpose.
4. Tax residence certificate
A tax residence certificate is an official document issued by the competent authority of the foreign jurisdiction confirming the company’s residence for tax purposes. It must follow the form required in that jurisdiction, be legalised or apostilled where necessary, and be translated into Ukrainian in accordance with Ukrainian law.
The certificate must be held before payment. A certificate for the preceding reporting year may be used for payments in the current year, but the payer must obtain a certificate for the current year after year-end.
If no certificate is presented before payment, the Ukrainian payer applies the domestic rate for the relevant income type. A later certificate may be used only in a refund claim for over-withheld tax.
5. Beneficial ownership and intermediary structures
Residence in a treaty country is necessary but not sufficient for treaty benefits. The foreign company must also be the beneficial owner of the relevant income — the person entitled to receive and use that income, rather than an agent, nominee, or conduit. Beneficial ownership of income is a treaty concept and is not the same as being the ultimate beneficial owner of the company.
Treaty benefits are not available to agents, nominees, conduit companies, or entities contractually required to pass the income to another party. If the immediate recipient is not the beneficial owner, a treaty with the beneficial owner’s country may be applied only under the procedure and conditions set by the Ukrainian Tax Code, including receipt by the payer of the prescribed statements and supporting documents.
For intra-group financing, holding company arrangements, and royalty structures, a beneficial ownership analysis should be conducted before the first payment. Contemporaneous documentation of the entity’s substance, functions, and genuine business purpose should be prepared in advance rather than reconstructed after a challenge.
6. Permanent establishment risk in Ukraine
A foreign company doing business in Ukraine through a fixed place of activity, employees, or agents, without a registered local entity, may unintentionally create a permanent establishment (PE) and become subject to Ukrainian corporate profit tax on the profits attributable to that PE.
PE is defined as a fixed place of activity through which the non-resident conducts business in Ukraine, fully or partly. Typical PE forms include a management office, branch, factory, workshop, and a server located in Ukraine. PE may also arise from prolonged construction or installation works, from providing services through engaged personnel, or through a dependent agent that concludes contracts, negotiates their material terms, or plays the principal role leading to contracts that the non-resident routinely concludes without material modification.
PE thresholds, excluded preparatory or auxiliary activities and agency rules vary between Ukrainian law and each treaty. If a PE exists, the non-resident must register with the State Tax Service of Ukraine and report the profits attributable to it.
7. Common reasons treaty relief fails
The most frequent reasons treaty relief fails or is challenged after payment:
No certificate before payment. A certificate received later cannot justify the treaty rate for a payment already made.
Incorrect income classification. Royalties, services, interest and management fees are governed by different treaty articles.
Intermediary structure rather than beneficial owner. A conduit without genuine functions does not qualify for relief solely because of its residence.
Principal purpose test. Relief may be denied where a structure was created mainly to obtain treaty benefits without a genuine commercial purpose.
8. Checklist before a cross-border payment
- Confirm a double taxation treaty is in force between Ukraine and the foreign company’s country of tax residence (current list on the Ministry of Finance of Ukraine website)
- Identify the income type and the applicable treaty article (dividends, interest, royalties, business profits, etc.)
- Confirm the foreign company is the beneficial owner — not an agent or conduit
- Obtain the tax residence certificate before payment, legalised or apostilled where required and translated into Ukrainian in accordance with law
- Check whether the relevant treaty is covered by the MLI and whether the principal purpose test applies to the arrangement
- Assess permanent establishment risk if the non-resident is active or has personnel in Ukraine
- Apply the treaty rate or the domestic rate prescribed by the Ukrainian Tax Code for the relevant income type, and remit the withheld tax to the budget
- Report the payment and withheld tax in the relevant corporate income tax return and the applicable non-resident appendix
9. Ukraine’s treaty network
Ukraine has double taxation treaties with a broad range of countries covering most of its key trade and investment partners. These include Austria, Belgium, the United Kingdom, Germany, the Netherlands, Poland, France, Israel, Turkey, the United States, Canada and many others. The current list of active and signed treaties is published by the Ministry of Finance of Ukraine.
The DTTs with Russia and Belarus were terminated in 2022 and are no longer operative. Payments to residents of those states are taxed solely under Ukrainian domestic rules.
Legislative amendments to Ukraine’s MLI position took effect on 7 June 2025. Ukraine deposited its updated consolidated position, including its list of covered treaties and reservations, with the OECD depositary on 20 October 2025; it covers, among others, treaties with Austria, Denmark, the Netherlands, the United Kingdom, Switzerland, Singapore, the UAE, and Malaysia. Whether the MLI changes a particular treaty also depends on the other jurisdiction’s position and the relevant effective dates.
Ukraine–Germany: the 1995 treaty remains in force. A new Ukraine–Germany treaty was signed on 19 May 2026 but has not yet entered into force. It will replace the 1995 treaty only after both states complete their domestic procedures.
Frequently asked questions
Can treaty benefits be claimed if the residence certificate arrives after payment?
If the certificate is not available before payment, the domestic rate for the relevant income type applies. A refund of over-withheld tax may be requested after the certificate is obtained.
Is a certificate from last year valid for payments made this year?
Yes. A certificate for the preceding reporting year may be used for payments in the current year, but a certificate for the current year must be obtained after year-end.
Do treaty benefits apply automatically?
No. The payer must confirm that the treaty is in force, classify the income correctly, obtain the certificate before payment and verify beneficial ownership where the treaty requires it.
What is the principal purpose test and which companies are affected?
The principal purpose test allows relief to be denied where obtaining treaty benefits is one of the main purposes of an arrangement and granting them would conflict with the treaty’s object and purpose. It is particularly relevant to holding, intra-group financing and royalty structures.
Where can we verify whether a treaty with a specific country is in force?
The current list is published by the Ministry of Finance of Ukraine and should be checked before each payment.
Can a foreign company providing services to Ukrainian clients create a permanent establishment in Ukraine?
Yes, depending on the duration and nature of the activity and the applicable treaty. If a PE exists, the non-resident must register in Ukraine and pay corporate profit tax on the profits attributable to it.
How DLF can help
DLF attorneys-at-law supports foreign companies and their Ukrainian subsidiaries with cross-border payments and corporate structures: identifying the applicable treaty, classifying income, analysing beneficial ownership, preparing treaty-relief documentation, assessing permanent establishment exposure, and dealing with Ukrainian tax authorities. The team combines tax law and contract law expertise when structuring dividends, interest, royalties, intra-group financing, and non-resident activities in Ukraine.
Igor Dykunskyy, LL.M., Partner, Attorney-at-law, DLF attorneys-at-law
Contacts: +380 44 384 24 54, info@dlf.ua
This material is intended for general information. The application of the approaches described depends on the circumstances of the specific situation and requires a separate legal assessment.