Ukraine and Switzerland sign protocol on amendments to Convention on Avoidance of Double Taxation

Today, Minister of Finance of Ukraine Oksana Markarova and the newly designated President of the Swiss Confederation Uli Maurer have signed the protocol on amendments to the Convention on the avoidance of double taxation between Ukraine and the Swiss Confederation concerning income and capital taxes.

The signing of this protocol is aimed to prevent double taxation on the income/revenues of private persons and legal entities generated on the territory of the two countries. The agreed steps to achieve it include the distribution of taxation rights concerning the respective types of income depending on its place of origin as well as tax credit based on the tax amount paid on the territory of the other country.

“The signing of this protocol is important for Ukraine because it will allow to prevent tax evasion, will remove tax discrimination and will establish mechanisms to improve cooperation and information exchange between the tax authorities of Ukraine and Switzerland, - Minister of Finance Oksana Markarova said. – This document creates favourable conditions for Ukrainian and Swiss investors and settles international taxation issues in the relationship between the two countries.”

The provisions of the protocol are in line with the OECD Model Convention and the BEPS Action Plan (regulations on the prevention of tax-base erosion and profit shifting).

For information

The protocol signed by Ukraine and the Swiss Confederation stipulates the following:

• Increase of the tax rate for interest rates and royalty from 0% to 5%;

• A new article has been added to the protocol to improve the mutual settlement procedure (settlement of tax disputes) through arbitrage;

• New version of the article on information exchange that significantly extends the capacities of the two countries in tax information exchange without conditions concerning the requirements of the national tax interest or bank secret;

• Regulations on the application of the right on tax advantages – tax advantages shall not be granted for any type of income or property, if one of the main goals of any arrangement or agreement between business entities was to receive this advantage in any direct or indirect way. The agreed rates and regulations are in line with the general practice of Ukraine in signing such international agreements on the avoidance of double taxation and protocols to them with other countries. 
After the signing of the protocol Ukraine and Switzerland shall complete their domestic procedures required for its ratification.