The income tax treaty between Malta and Ukraine entered into force on 28 August 2017. The treaty, signed 4 September 2013, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Malta income tax and Ukrainian tax on profits of enterprises and personal income tax.

Withholding Tax Rates

• Dividends - 5% if the beneficial owner is a company directly holding at least 20% of the paying company's capital; otherwise 15%
• Interest - 10%
• Royalties - 10%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
• Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Limitation of Benefits

Article 21 (Limitation of Benefits) provides that a resident of a Contracting State shall not receive the benefit of any reduction in or exemption from tax provided by the treaty if the main purpose or one of the main purposes of such resident or a connected person was to obtain the benefits of the treaty. The limitation does not apply if the resident is engaged in substantive business operations in its State of residence and the relief claimed is with respect to income connected with such operations.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Effective Date

The treaty applies from 1 January 2018.