The treaty protocol provides for a low withholding tax rate of five percent for royalty and interest payments. An arbitration clause is also included to increase legal certainty for taxpayers.
On January 24, 2019, Switzerland and Ukraine signed a protocol to adapt the Switzerland-Ukraine tax treaty to the current treaty policies of both countries.
Under the protocol, a stake of ten percent (as opposed to the current 20 percent) in the distributing company will be regarded as a qualified participation in the future. Dividends paid to the National Bank or to the contracting states will be taxable only in the beneficial owner’s state of domicile.
A residual tax rate of five percent is planned for both interest and royalty payments.
The protocol contains an anti-abuse clause. An arbitration clause has also been added to increase legal certainty for taxpayers.
Finally, the protocol contains an administrative assistance provision in accordance with the international standard for the exchange of information upon request.