Transactions with non-residents

Transactions with non-residents

Impact of laws 466 and 1117

Impact of laws 466 and 1117

  • We will diagnose business models that provide for the payment of passive income to non-residents (dividends, interest, and royalties), provide conclusions on if it is legal to accrue and pay non-residents income tax.
  • We will analyze and help justify the possibility to apply reduced rates under the Conventions of Ukraine to avoid double taxation when paying out to non-residents:
    • provide an official opinion on the compliance with the status of the beneficial owner of the income, the sufficiency of the non-resident substance, or recommendations for its strengthening;
    • analyze other risks, like passing PPT according to MLI.
  • We will tax audit the agreements and source documentation based on which payouts are made to non-residents, we will help to classify payments for tax purposes correctly and reflect them in tax accounting.
  • We will determine whether payments in favor of non-residents fall under the concept of "constructive dividends" according to the TCU, outline the tax implications, and provide recommendations.
  • We will test payments in favor of non-residents for adjustments of the Ukrainian companies financial results (specifically, "fine capitalization", 30% adjustment for imports/exports, 100% adjustment for the failure to pass the "business goal" test).

For:

  • Ukrainian companies, which:
    • are part of international groups;
    • have intragroup loans;
    • have obligations to pay royalties under license agreements;
    • carry out export/import of goods or services with related or unrelated non-residents;
  • non-residents who buy/sell (directly or indirectly) shares in Ukrainian companies, which assets are by over 50% consists real estate in Ukraine.

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