DOUBLE TAXATION. CAUSES AND CONSEQUENCES

Since the introduction of martial law in Ukraine, many of our citizens have left for other countries. In the first months, they learned, and then many began to earn a living and work on their own.

And here a situation arose when working citizens of Ukraine must pay taxes both in the country in which they work and in Ukraine. That is, the so-called double taxation occurs. Many do not know that after a certain period they become a tax resident.

Причины 

Самая первая причина в том, что находящиеся за рубежом граждане могут находиться в трудовых отношениях с работодателями из Украины. Работая дистанционно, граждане платят налоги с заработной платы в Украине.

Но в европейских странах таких как Польша, Германия, Чехия и ряд других европейских стран считается, что если человек находится на территории страны более полугода, а это 183 дня, то он автоматически становится налоговым резидентом. Налоговые резиденты обязаны платить налоги в стране, в которой они фактически находятся. И это касается не только наемных работников, но и физических лиц-предпринимателей (ФЛП), которые зарегистрированы в Украине.

Consequences of double taxation

The main consequence of double taxation is additional financial expenses for citizens. But there are a number of countries that today understand the situation of Ukrainians and at the local level are implementing a program of exemption from taxation on the territory of the country where our citizens are located.

Such countries include Lithuania and Ireland. Others also make certain concessions for our citizens, based on international treaties and conventions.

Double taxation on the example of Poland

Poland is the most loyal to our citizens. According to the legislation of Poland, if a foreigner is legally present on the territory of the country, after the expiration of 183 days he becomes a tax resident.

But according to the explanations of the Polish Ministry of Finance, if Ukrainians living in Poland because of the war do not receive income, then they do not need to pay taxes. But if citizens of Ukraine work legally in Poland and receive income not in Ukraine, but in Poland, taxes are paid to the Polish treasury.

How to avoid double taxation?

First of all, you need to familiarize yourself with the tax legislation of the country in which you are located. Many countries have bilateral agreements with Ukraine to avoid double taxation. Further, it will not be superfluous to consult with a tax lawyer. After all, each situation is individual.

You should not use advice from the Internet or friends, because there are almost no two identical situations. Not all countries are loyal to Ukraine, each may have its own regulations and amendments to them. Some countries require tax residents to submit declarations. In order not to pay taxes twice, it is better to analyze the legislation of the country of residence and then there will be no problems with paying taxes.