The Convention for the avoidance of double taxation was ratified with Malta

05/ 05/ 2017

Max Lebedev, Managing Associate at GOLAW

Verkhovna Rada of Ukraine ratified the Convention with Malta for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and also the Protocol thereto.

The Convention provides that passive income is not subject to double taxation in both countries and is able to apply the following rates:

  • Dividends: 15% – general rate; 5% – for dividends paid to a company which holds directly more than 20% of the share capital of the company paying the dividends.
  • Interest and royalties will be taxed at 10%.

It is assumed that the right to tax certain types of income in Ukraine or Malta will be determined depending on the location of such income. Also, the tax liabilities of the taxpayer will be considered one of the state taxes paid in another state.

It should be noted that Malta enjoying increasing popularity among Ukrainian businessmen, who want to bring their business into the international arena. Recall that Malta has a number of advantages for the implementation of a structured international trade and for building holding structures. Furthermore, Malta offers a very comfortable environment for individuals residence permit.

Ratification of the Convention is undoubtedly a positive step and will help avoid double taxation of income of individuals and entities received in both countries and eliminate some tax barriers to international investment and trade.

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