News · Tax

Ukraine and Germany replace their 1995 tax treaty: 5% or 15% on dividends, 5% on interest and royalties

Updated 8 November 2026 · Ukraine For ALL, Kyiv

For a German group with a Ukrainian subsidiary, the treaty sets how much withholding tax in Ukraine is taken on every payment to the parent. Without a treaty claim, the Ukrainian company withholds 15% on dividends, interest and royalties paid abroad (Tax Code, subpara. 141.4.2).

What the new treaty sets for payments from Ukraine to Germany

The 1995 treaty also gave 5% on dividends to a company holding 20% of the capital, and capped all other dividends at 10%. Portfolio shareholders below 20% therefore move from 10% to 15%, and the 5% rate now comes with a 365-day holding period. Reorganisations such as a merger or a demerger do not break that period.

What else changes for German owners

• Property-rich companies. Ukraine may tax the gain on shares that drew more than 50% of their value from Ukrainian real estate at any time in the 365 days before the sale (Article 13(4)).
• Principal purpose test. Treaty benefits are refused where getting them was one of the principal purposes of an arrangement, unless the benefit matches the treaty's purpose (Article 26(6)).
• Low-taxed branches abroad. When a company's home state exempts the profit of its branch in a third jurisdiction, and the tax there is below 60% of the home-state tax, that income loses treaty benefits, except income from an active business carried on through that branch (Article 26(3)–(4)).
• Tax administration. The two tax services exchange information and help each other collect taxes.

When the new rates start

1. The Verkhovna Rada ratifies bill No. 0402. Its committees started work on 3 November 2026.
2. Germany completes its own ratification.
3. The treaty enters into force on the day the instruments are exchanged.
4. Withholding taxes follow the new rates for amounts paid on or after 1 January of the next calendar year. Other taxes follow for periods from that date (Article 29(2)).

Until then the 1995 treaty applies to every payment (Article 29(3)). Ratification calendars in both parliaments can move, so plan for 2027 at the earliest and confirm the date before a large dividend.

What to do before the switch

1. Check the holding. A German parent needs 20% of the capital directly, held for 365 days up to and including the payment day.
2. Time the dividend. A shareholder below 20% keeps the 10% cap of the 1995 treaty only for amounts paid before the new rates apply.
3. Order the certificate of residence. The Ukrainian company applies the treaty rate itself at payment against a German certificate of residence, legalised and translated (Tax Code, paras. 103.2–103.5).
4. Review loans and licences. Interest and royalties to Germany carry a 5% cap, and interest paid to KfW or DEG is exempt from Ukrainian tax.
5. Plan the transfer. The treaty fixes the tax and leaves the currency route to the NBU rules in our guide to dividends from Ukraine to a non-resident.

FAQ

Is the new Ukraine–Germany tax treaty in force?

It awaits ratification. The Verkhovna Rada received the bill on 2 November 2026, and Germany has to ratify too. The 1995 treaty applies until the new one enters into force.

What is the withholding tax on dividends from Ukraine to Germany under the new treaty?

5% for a German company holding at least 20% of the capital for 365 days, the payment day included. 15% for everyone else, including investment and pension funds.

What rate applies to interest and royalties paid to Germany?

5% of the gross amount. Interest on loans guaranteed by Germany for exports or direct investment, and interest paid to the German Government, Deutsche Bundesbank, KfW or DEG, is exempt from Ukrainian tax.

What does a German shareholder need to get the treaty rate?

A certificate of residence from its German tax office for the year of payment, legalised and translated, and the status of beneficial owner of the income. The Ukrainian company keeps it on file before the payment day.