• Andriy Reun

    Partner, Head of Tax, Evris Law Firm, Attorney-at-law

Evris Law Firm

Address: 52 Bohdan Khmelnytsky Street, Kyiv, 01030, Ukraine

Tel: +380 44 364 9191

E-mail: office@evris.law

Web-site: www.evris.law

Evris Law Firm has been known on the Ukrainian legal market since 2017 as a strong team of litigators and corporate lawyers with a significant international background. Through a number of reorganizations and constant search for the most effective business model, the firm has grown organically into a full-service law firm following the needs and requests of its clients.

Today, Evris is a Kyiv based full-service law firm which has gathered talented and dedicated lawyers with creative thinking and a systematic approach. The company provides 360-degree legal advice on various matters related to corporate and M&A, banking and finance, tax, and dispute resolution. Our primary focus is on agriculture, real estate, energy, FinTech, and capital markets, as well as bankruptcy and debt restructuring issues. We find special interest in supporting investment in Ukraine, on both Ukrainian businesses and entering foreign investors. The Ukrainian business community already names us advocates of investment in Ukraine.

The firm grew from 5 lawyers to 50 in 2019, which indicates well-timed expansion of the firm’s practices and the right investment in the firm’s human potential. Evris is an efficient combination of lawyers with LL.M. diplomas, attorneys-at-law, PhDs, ex-inhouse lawyers from banks, telecom companies, energy and agriculture sectors, and alumni from the “Big 4”.

The client portfolio includes large and medium-sized national and foreign  companies, banks, financial institutions, corporate and private investors who are doing business in Ukraine or entering  the local market. In both established  and emerging markets, the firm’s lawyers provide its clients with insights into  the local business environment ­ alongside experience in multiple ­jurisdictions.

Managing partner: Ihor Kravtsov

Number of Partners: 4

Number of Counsels: 3

Number of Associates:  42

Languages: Ukrainian, English, Russian

International Tax

BEPS, MLI, PPT, ATAD, CFC, CbCR, CRS and other tax-related abbreviations have come into permanent use by the tax authorities, taxpayers and tax advisors. Although neither of them is currently applicable in Ukraine, important steps have been taken in this regard. This article will provide a snapshot of the Ukrainian tax environment as far as international taxation is concerned.

DTT network

Ukraine has a network of 77 double tax treaties (DTTs). Certain DTTs provide for nil withholding tax (“WHT”) rate with respect to income that would otherwise be subject to a standard Ukrainian WHT of 15%, provided that the relevant conditions are met. Such income includes dividends payable to Dutch shareholders, interest payable to UK creditors, royalties payable to Swiss licensors, capital gains derived from sale of shares in Ukrainian real property rich companies payable to Cypriot shareholders, etc.

Apart from the conditions set out in DTTs, in order for an income recipient to be eligible to apply the DTT, the Tax Code of Ukraine requires that the recipient shall be a beneficial owner of income and provide a properly formalized tax residence certificate to the Ukrainian paying company. Importantly, the burden of proof that the income recipient is not a beneficial owner of income lies with the tax authorities.

Ukraine has taken a course to eliminate nil WHT rates applicable to payments of dividends, interest and royalties to foreign companies, as well as to avoid nil taxation of capital gains derived from alienation of shares in Ukrainian real estate rich companies. Protocols increasing nil WHT rates have been signed to DTTs with Switzerland, UK, the Netherlands and Austria. A protocol to Ukraine — Cyprus DTT eliminates nil taxation upon alienation of shares in Ukrainian property rich companies. However, neither of these protocols has been ratified by the Ukrainian Parliament and, therefore, nil WHT rates are still in place.


Ukraine committed to implement a minimum BEPS standard including four mandatory actions. Ukraine shall implement these actions by: (1) review of harmful or potentially harmful regimes, exchange of tax rulings which can be used by tax authorities for risk assessment — Action 5; (2) introducing the principal purpose test (PPT) and simplified li­mitation on benefits — Action 6; (3) introdu­cing three-tier transfer pricing documentation: country-by-country (CbC(r)) report, Master-file, Local-file — Action 13; and (4) improvement of mutual agreement procedures — Action 14. So far, neither of these actions has been fully implemented.


Ukraine signed and ratified MLI. Ukraine declared willingness to introduce the relevant changes to all its DTTs. Interestingly, certain countries that invest frequently in Ukraine (e.g. Austria, Spain, Malta, Netherlands, Switzerland, Germany, Norway to name a few) did not share Ukraine’s intentions. Consequently, DTTs with these countries will not be affected by MLI.

As soon as MLI becomes effective for Ukraine (presumably, starting 2020), Ukraine shall implement Actions 6 and 14 of the minimum BEPS standard.

Ukraine chose the PPT to be introduced in applicable DTTs. This means that reduced tax rates under the DTT could be denied if, based on the actual circumstances, it is reasonable to conclude that obtaining these benefits was one of the principal purposes of the structure and/or the transaction or arrangement. Mutual agreement procedure envisaged in the currently effective DTTs shall also be amended as a result of MLI coming into effect. Ukraine has also opted to apply optional provisions of the MLI relating to taxation of capital gains from alienation of shares in real property rich companies and anti-abuse rules for permanent establishments covered by BEPS Action 7 “Preventing the artificial avoidance of permanent establishment status”.


Given that Ukraine is not yet a member of the EU, it is not required to implement the EU ATAD Directive.

However, the Ministry of Finance and the National Bank of Ukraine developed a draft law aimed at implementation of BEPS Actions in excess of the minimum standard (the “BEPS Bill”). Specifically, the BEPS Bill suggests introduction of a variation of the general anti-abuse rule, envisaging that controlled transactions without valid business reasons can be disregarded for tax purposes. The BEPS Bill also provides for Ukrainian controlled foreign company (CFC) rules envisaging taxation of individuals in relation to CFC profits. Other notable changes proposed by the BEPS Bill include constructive dividends rules, special rules for taxation of capital gains from alienation of shares in Ukrainian real property rich companies, three-tier transfer pricing documentation, the “low value-added” services concept and other important tax changes, such as, for instance, revisiting current interest deductibility limitations and definition of permanent establishment. As we can see from the above, the BEPS Bill covers not only the minimum BEPS standard, but also addresses additional BEPS Actions, such as Action 3 “Designing effective controlled foreign company (cfc) rules”, Action 4 “Limiting base erosion involving interest deductions and other financial payments”, Action 7 “Preventing the artificial avoidance of permanent establishment status” and Actions 8-10 “Aligning transfer pricing outcomes with value creation”, as well as certain ATAD requirements.

It is worth noting that proposed CFC rules are different from the ATAD’s CFC concept. Particularly, ATAD suggests that CFC rules have the effect of re-attributing the income of a low-taxed controlled subsidiary to its parent company. In turn, the BEPS Bill suggests that profits of CFC owned by Ukrainian residents-individuals would be subject to personal income tax in Ukraine pro rata to their participation in CFCs. Moreover, if annual revenues of all CFCs exceed EUR 2 million, their profits would be adjusted according to the special rules provided by the BEPS Bill. The rules on taxation of CFC profits will not be applicable to all CFCs. Specifically, if revenues of all individual’s CFCs are below EUR 1 million, profits of such CFCs will not be subject to tax in Ukraine. CFC tax exemption shall also apply to profits of CFCs registered in countries, having valid DTTs with Ukraine and not included in the “offshore” list, provided that certain criteria are met. Such criteria include effective tax rate, type of income (passive or active), as well as substance requirements to the relevant CFC.

The country-by-country reporting (CbCR) rules proposed by the BEPS Bill are also unique. The rules are stricter for Ukrainian business groups than for foreign ones. In particular, international business groups controlled by Ukrainian tax residents or citizens or who have their primary assets and staff located in Ukraine and/or primarily trade in goods of Ukrainian origin would be required to prepare CbCR if the consolidated revenues of such groups exceed EUR 50 million. Other international business groups shall be required to prepare CbCR if their consolidated revenues exceed EUR 750 million.

Apart from the transfer pricing rules, the BEPS Bill does not provide for specific rules to address hybrid mismatches and exit taxation.

If the BEPS Bill is enacted, Ukraine is expected to comply with the minimum BEPS standard. Also, given the number of tax changes intended for introduction, Ukraine may also qualify for ha­ving complied with the ATAD I requirements.


The On Currency and Currency Transactions Law of Ukraine came into effect as of 7 February 2019. The said Law requires that the Government and National Bank of Ukraine should prepare draft legislation aimed at implementation of, inter alia, automatic exchange of information.

There is a strong intention on the part of the Government to implement the automatic exchange of information based on the CRS standard as of 2020 for the 2019 reporting year. Ukraine has yet to meet all the necessary technical and confidentia­lity requirements to reach this ambitious goal.

Exit Capital Tax

This overview would be incomplete without mentioning the presidential exit capital tax (ECT) initiative. This initiative effectively suggests eliminating WHT from the Ukrainian tax system. Instead, businesses distributing their profits in the form of dividends to their foreign sharehol­ders would be subject to 15% ECT payable by the dividend paying company. In the event of disguised distribution of profits (e.g. royalties, interest exceeding certain thresholds, non-arm’s length sales or purchases, etc.) the relevant Ukrainian businesses would be subject to ECT at the rate of 20%. This will effectively eliminate the need of international tax structuring for dividends, royalties and interest payments since the ECT shall be payable on account of the Ukrainian company paying the relevant income to a foreign income recipient. Special attention shall be paid to taxation of capital gains from alienation of shares in Ukrainian companies and taxation of permanent establishments of foreign companies. This is where international tax advisors would be necessary as the rules are not straightforward and applicability of the relevant DTTs is likely to be challenged by the Ukrainian tax authorities.


The year 2019 could become a year of far-reaching changes in international tax for Ukraine. The Ukrainian Government clearly intends to outperform their commitments in relation to fulfillment of the BEPS minimum standard. It is yet to be seen how the Ukrainian Parliament would vote on these initiatives and how and whether the ECT initiative would fit into the Ukrainian tax framework. Proper implementation of voted initiatives is also key for their success. Meanwhile, both private and corporate taxpayers have time to analyze the potential impact of proposed initiatives on their structures and business models and, where necessary, to adjust them.