Press releases

Amendments to the Double Tax Treaty between Ukraine and Switzerland: looking from the inside and from the outside

6 December 2020

Deloitte Ukraine and Deloitte Switzerland, with support of the Embassy of Switzerland in Ukraine, together with representatives of the Swiss Federal Department of Finance and the Ministry of Finance of Ukraine, discussed the Protocol to Tax Treaty between Ukraine and Switzerland on avoidance of double taxation with respect to taxes on income and capital, and amendments provided by it.


  • Liudmyla Palamar, Head of International Tax and International Treaties Implementation Department of the Ministry of Finance of Ukraine
  • Pascal Duss, Head of Bilateral Tax Issues and Double Taxation Treaties of the State Secretariat for International Finance of the Federal Department of Finance
  • Natalia Rudenko, Senior Manager at Deloitte Ukraine 
  • Ferdinando Mercuri, Partner at Deloitte Switzerland

The participants discussed the pain points and challenges faced by the companies that work with Ukraine and Switzerland.

Key takeaways:
  • As Switzerland is the main trading partner of Ukraine, it is crucial to ensure a well-balanced regulation of relations between the countries with regard to double taxation. Amendments to Double Tax Treaty, which will come into effect in Ukraine on 1 January 2021, reflect outcomes of complex negotiations.
  • In addition to the expected increase in tax rates on dividends, interest and royalties, we recommend that you pay the most attention to: information exchange rules, new article on the right to benefits (principal purpose test), rules for MAP and arbitration arrangements, special rules for income from sale of shares in companies with real estate assets, and the most-favored-nation (MFN) clause stating that if Ukraine concludes a convention/agreement with a third country that has more favorable conditions than the convention concluded, then such favorable conditions (exemption from taxation or reduced tax rates) should automatically apply to the Treaty between Ukraine and Switzerland from the date such other convention enters into force. A direct effect provision on the use of OECD Commentary to the Model Convention for the Avoidance of Double Taxation as a guidance for interpretation of the Double Tax Treaty provisions has become a true novelty.
  • Even with the forthcoming entry into force of the tax reform, Switzerland is able to offer companies an effective tax rate of 0-12% (for certain types of income) and a combined effective rate of 11.5%, as well as a number of various tax benefits (depending on the nature of your business in Switzerland). Switzerland remains the “first in its class” country with a competitive economy, high standards of living, excellent tax climate and innovative capacity, making it an extremely attractive location for international profit centers. It confidently holds the lead among other countries as an attractive business location, including for Ukrainian companies. Therefore, if business can afford it, it should consider Switzerland as a location for trade and innovation businesses, to say the least.
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