Taxation of international financial transactions often raises questions for businesses. Especially when it comes to dividend payments through the mechanism of assignment of claims. Let\u2019s break down whether repatriation tax arises in such a situation and what opportunities exist for tax optimization.<\/p>\n\n\n\n
Situation<\/strong><\/p>\n\n\n\n One non-resident (Investor A) had the right to receive dividends from a Ukrainian company. However, they transferred (assigned) this right to another non-resident (Investor B). The question arises: when and if repatriation tax should be withheld?<\/p>\n\n\n\n Tax Authority\u2019s Position<\/strong><\/p>\n\n\n\n \ud83d\udd39 At the moment of assignment, repatriation tax does not arise<\/strong> \ud83d\udd39 Upon the actual payment of dividends to the new creditor, the tax applies<\/strong> Practical Application and Optimization Opportunities<\/strong><\/p>\n\n\n\n \ud83d\udca1 Using the assignment mechanism can be useful for managing international payments.<\/strong><\/p>\n\n\n\n \ud83d\udc49 If the new creditor is a resident of a country with which Ukraine has a tax treaty, the rate may be lower than 15%.<\/p>\n\n\n\n \ud83d\udc49 If the new creditor is a resident of Ukraine, no repatriation tax applies. This can be an effective option for optimizing payments.<\/p>\n\n\n\n \ud83d\udc49 It is also worth checking whether a structure for exempting dividends from taxation in Ukraine can be used (e.g., in the case of payments between holding companies that meet certain conditions).<\/p>\n\n\n\n Conclusion<\/strong><\/p>\n\n\n\n \u2705 The transfer of claims between non-residents is not subject to tax. \ud83d\udd39 Have questions about international tax structuring? We can help find the optimal solution for your business!<\/strong> \ud83d\ude80<\/p>\n","protected":false},"excerpt":{"rendered":" Taxation of international financial transactions often raises questions for businesses. Especially when it comes to dividend payments through the mechanism of assignment of claims. Let\u2019s break down whether repatriation tax arises in such a situation and what opportunities exist for tax optimization. Situation One non-resident (Investor A) had the right to receive dividends from a […]<\/p>\n","protected":false},"author":4,"featured_media":11177,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[297],"tags":[],"class_list":["post-11219","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-dividends"],"_links":{"self":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/11219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/comments?post=11219"}],"version-history":[{"count":1,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/11219\/revisions"}],"predecessor-version":[{"id":11220,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/11219\/revisions\/11220"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media\/11177"}],"wp:attachment":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media?parent=11219"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/categories?post=11219"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/tags?post=11219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
The transfer of a claim between non-residents is not considered as income payment, so no tax is due at this stage.<\/p>\n\n\n\n
When the Ukrainian company pays dividends to the new non-resident (Investor B), repatriation tax is withheld at the standard rate of 15% (unless the international double taxation treaty provides a lower rate).<\/p>\n\n\n\n
\u2705 Repatriation tax only applies when dividends are paid to the new creditor.
\u2705 Tax burden can be reduced if the new creditor has a preferential rate under an international treaty or is a resident of Ukraine.<\/p>\n\n\n\n