07/ 09/ 2017

On August 28, 2017, the European Business Association received a response from the State Fiscal Service of Ukraine on an issue of concern of EBA Tax Committee experts related to tax rates on income payments to a resident of Ireland in the form of remuneration for the use or grant of the right to use computer programs as the copyright issue.

The State Fiscal Service provided a consultation with detailed requirements regarding the beneficiary’s benefit, references to court practice and a clear final position on the raised issue. Attention was particularly paid to the fact that the actual recipient of income is a person who owns not only the right to receive income but also determines the further economic share of such income. In addition, the tax authorities have come to the conclusion that in case of payment by a resident of Ukraine to a resident of Ireland (beneficiary’s owner) for the use or grant of the right to use copyright for scientific works (computer programs), such payment will be regulated by paragraph 3 of Article 12 of the Convention between the Government of Ukraine and the Government of Ireland regarding the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and proceeds from the alienation of property (“… levied tax should not be more than 10 percent of total royalties … “).

We are grateful to the State Fiscal Service for the professional approach in providing this advice, as this communication tool is very effective. We look forward to further productive and constructive cooperation.

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