Head of International Corporate Law and Fintech Practice
Expert in fintech, crypto, and international corporate law with over 20 years of experience. Specializes in crypto licensing (VASP/CASP), iGaming business support, and international structuring, asset protection, and OSINT analytics for risk assessment and due diligence.
Double Taxation Agreement
When is a double taxation treaty needed?
A large number of Ukrainians moved abroad with the outbreak of full-scale war. Entrepreneurs continued to engage in professional activities in another country, while receiving income from Ukraine, ordinary citizens found employment opportunities abroad, Ukrainian companies, aiming to expand and ease the difficult conditions of doing business in our country during the war, registered subsidiaries in other countries (in particular, EU member states). All these points lead to the question of paying taxes in Ukraine (the country of citizenship) and the country of residence.
Today, our country has concluded a number of international agreements with various states, in particular Germany, Denmark, Great Britain, Poland, etc. Their purpose is to regulate the issue of double taxation of citizens' income. In particular, citizens of Ukraine can take advantage of double taxation treaties (hereinafter referred to as DTTs), as well as allow themselves to reduce or completely eliminate double taxation of income. Thus, a double taxation treaty is necessary in the case when a person, receiving income from one state, temporarily resides in the territory of another, and wishes to avoid an excessive tax burden by paying taxes either exclusively in the country of tax residence, or only partially.
Main terms of a double taxation treaty
Taxation of non-residents' income is a key aspect of life, regulated by the Tax Code of Ukraine, specific international tax treaties, as well as some acts of a recommendatory nature (such as the 2012 Letter of the State Tax Service of Ukraine). The existence of this legal regulation simplifies citizens' understanding of the nature of the envisaged actions and the specifics of the application of the relevant treaties.
Although different DTAs may differ from each other, they share a common structure and legal nature. The main elements of such agreements are listed below.
- Tax residency clause. The agreements establish the procedure for determining the residency of individuals for tax purposes, additional criteria for individuals who can be considered residents of both countries, and the distribution of tax rights for different types of income (from business activities, wages, capital, etc.);
- Double taxation elimination method. Two main methods are most often used: first, the credit method (tax paid in one country is credited when paying tax in another), and second, the exemption method (income taxed in one country is exempt from taxation in another);
- Anti-tax evasion provisions. Such agreements contain provisions to prevent the artificial use of agreements for the purpose of tax evasion, and provide for mechanisms to resolve such disputes.
Rules for applying double taxation treaties in business
As already noted, these treaties play an important role in international business, helping companies avoid double taxation of income and ensuring transparency of tax obligations. To take advantage of such treaties, certain rules and procedures must be followed, in particular:
- first, confirm tax residency in Ukraine - obtain a certificate of residency through the State Tax Service;
- second, submit relevant documents to the foreign tax authority (in addition to the certificate of tax residency, this must also be a statement on the application of the provisions of the treaty);
- finally, verify the correctness of tax payment in accordance with the provisions of a specific DTA.
Usually, in the event of disputes regarding the application of the relevant DTA, companies can use the procedure of mutual agreement between the tax authorities of both countries. This allows to resolve differences in the interpretation of the provisions of the treaty and quickly resolve the problem.
Price of legal analysis of a double taxation agreement
Appealing to specialists in the field of tax law is the key to the successful application of double taxation agreements, taking into account all the necessary nuances. Specialized lawyers of the Law Firm “Prykhodko & Partners”, having the appropriate experience and qualifications, can provide their services to interested clients, in particular:
- high-quality legal advice on the provisions of a specific double taxation agreement, the correctness of their application in a specific case;
- preparation of documents to confirm tax residency in accordance with the terms of a specific agreement, as well as representation of the client’s interests before the tax authorities of a foreign state to resolve issues.
The cost of legal analysis of such an agreement and other services can vary significantly depending on the complexity of the analyzed agreement, the scope of work and the specifics of the request (for example, its urgency, etc.). The fixed cost of the DUPO analysis is calculated after a preliminary consultation with our consulting lawyer.
Therefore, a double taxation agreement is a key tool for individuals and businesses, as it allows you to minimize tax risks, reduce the financial burden, and ensure compliance with the tax legislation of Ukraine and the host country.
For the correct application of the provisions of the agreement on avoidance of double taxation, we recommend contacting the lawyers of “Prikhodko and Partners”, who can help at different stages of resolving the issue. To find out the price of legal support, fill out the form below.
Calculate the cost of services
1 question
Are you interested in a legal analysis of a double taxation treaty?
2 question
Do you need a tax lawyer consultation?
3 question
Do you need legal help immediately?
You may also need:
Assignment of the right of claim under the credit agreement
Read more
Agreement for the purchase and sale of an apartment (real estate)
Read more
Additional agreement on termination of the contract
Read more
Agreement of intent
Read more
Agreement on creation to order and use of the object of intellectual property rights
Read more
Agreement between natural persons-entrepreneurs on provision of services
Read morecall back
during the day
Telegram
Viber
WhatsApp
Facebook
Instagram