Malta Signs Double Taxation Treaty with Ukraine

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In September 2013, a Double Taxation Treaty was signed between Malta and Ukraine.

Double taxation treaties have, as their object, the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

The treaty shall apply to persons who are resident of one or both of the Contracting States.

The taxes which are covered by this treaty includes all taxes imposed on total, or on elements of, income and capital gains including the alienation of movable or immovable property.

The treaty provides that where a company of one of the Contracting States pays dividends to a resident in the other Contracting State, the other Contracting State may tax such dividends. Nevertheless, taxation in the state of source is limited as follows:

  • 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 20% of the capital of the company paying the dividends;
  • 15% of the gross amount of the dividends in all other cases.

Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State. Nevertheless, if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the interest. The same withholding tax rate applies to royalties.

For more information about this treaty and potential structuring opportunities contact Dr. Jonathan De Giovanni, Head of Legal and International Tax.