On 4 September 2013, Malta and Ukraine signed a tax treaty - the first agreement of this kind between the two countries.

The main points of the Treaty are summarised as follows:

Withholding Tax:

Tax that may be levied at source
- on dividends paid to a company (other than a partnership) that holds directly at least 20% of the capital of the distributing company - 5%
- in all other cases - 15%

A 10% tax may be levied at source, with certain specific instances qualifying at 0%

A 10% tax may be levied at source. Not compromised in the term are payments for the use of, or the right to use, industrial, commercial or scientific equipment, such as operating lease payments.

Limitation of Benefits:

A General Limitation of Benefits provision is governed by Article 21 of the Treaty, but this is not applicable where "a company is engaged in substantive business operation in the Contracting State of which it is a resident and the relief from the taxation claimed from the other Contracting State is with respect to income that is connected to such operations".

Capital Gains:

Gains obtained by a resident of the other state from the alienation of shares deriving more than 50% of their value, directly or indirectly, from immovable property situated in the source state, may be subject to tax by the source state. However, gains resultant from the alienation of an interest in a partnership, are not covered by this provision.

Entry into force:

Upon completion and implementation by the internal ratification procedures by the second country, and notice being given thereto, the Treaty shall enter into force. The Treaty will apply in:

Ukraine - in respect of taxes withheld at source on amounts paid on or after 1 January or other taxes for taxable years or period beginning on or after 1 January, in the calendar year next following that in which the Treaty enters into force;

Malta - in respect of taxes on income derived during any calendar year or accounting period being on or after 1 January immediately following the date on which the Treaty enters into force.

To view the Convention, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.