Government Approved Ratification of Protocol on Amendments to the Convention Between Ukraine and Austria on Avoidance of Double Taxation

On October 9, 2020, the Cabinet of Ministers of Ukraine adopted an order to submit for ratification by the Parliament of Ukraine the Protocol on Amendments to the Convention between the Government of Ukraine and the Government of the Republic of Austria on Avoidance of Double Taxation and Prevention of Income and Property Tax Evasion.

This Protocol amends the Convention in order to bring its provisions in line with the OECD Model Tax Convention and to increase the tax rates on passive income in the source country.

In particular, the protocol provides an increase in general tax rates on dividends from 10% to 15% and on interest from 2% to 5%. The royalty tax rates were also increased, from 0% to 5% for the use of any copyright in scientific works, patents, etc., and from 5% to 10% for the use of copyright in literary or artistic works.

In addition to the increase in rates, the Convention is to be supplemented by new articles on limiting the application of the Convention's preferential provisions if the main purpose is to obtain such benefits and with regards to enhancing the capacity of the relevant authorities of the Contracting States to exchange tax information.

The application of the rules of an international agreement as part of the national legislation of Ukraine is possible only with the consent of the Parliament of Ukraine to be bound by such an agreement.

Thus, ratification of the Protocol is a necessary procedure for completing the internal state procedures necessary for the entry into force of the Protocol and the application of its provisions.