Taxation of Non-Residents’ Income from Equipment Leasing in Ukraine: Innovations and Key Aspects
The State Tax Service of Ukraine highlights crucial aspects of the taxation of non-residents’ income derived from leasing or rental payments for equipment used in Ukraine.
Tax Obligations for Ukrainian Residents
Ukrainian residents, including entrepreneurs and legal entities, are required to withhold tax from payments made to non-residents. This applies to income sourced from Ukraine, regardless of whether the payments are made in national or foreign currency.
Trends from 2017 to 2023
Between 2017 and 2023, a significant portion of such income was paid to companies based in jurisdictions where the definition of royalties includes payments for the use of equipment. Key recipients include companies from Cyprus, Turkey, Portugal, and other countries.
Application of International Conventions
Special attention should be paid to the application of international conventions on avoiding double taxation. According to these conventions, taxation of payments that may be classified as royalties for the use of industrial, commercial, or scientific equipment, including vehicles and other machinery, must occur at the source of these payments—in Ukraine.
Classification as Royalties
Considering international agreements and national legislation, payments made to foreign residents are defined as royalties and are subject to taxation in Ukraine. This includes payments for the use of equipment such as airplanes, cars, satellites, cranes, pipelines, and more.
Tax Rate and Legal Framework
According to the Tax Code of Ukraine, such income is taxed at a rate of 15% unless international agreements ratified by Ukraine provide otherwise. This rate ensures that Ukraine captures appropriate tax revenue from the economic activities occurring within its borders.
Sources of Information and Consultations
For detailed information and consultations, please visit the State Tax Service of Ukraine. This official resource provides comprehensive information on tax requirements and consultations on international taxation.
The tax rate is 15%, unless otherwise specified by international agreements ratified by Ukraine.
Payments for the use of industrial, commercial, or scientific equipment, including vehicles and other machinery, are subject to taxation.
International conventions on avoiding double taxation dictate that such income should be taxed at the source of the payments—in Ukraine.
? Yes, payments made in both national and foreign currencies are subject to Ukrainian taxation if they are sourced from Ukraine.
For detailed information and consultations, visit the State Tax Service of Ukraine.
