Congratulations on the successful completion of the international tax engagement!
The Protocol amending the Double Taxation Convention between Ukraine and Cyprus (“Ukraine-Cyprus Tax Convention”) became effective on January 1, 2020. It features important changes to the taxation of dividends, interest and gains from the disposals of shares.
Given that the Protocol came into force on November 28, 2019 and entered into effect on January 1, 2020, a number of transactions that involve sales of shares in Ukrainian property-rich companies by Cyprus shareholders have not been completed before the entrance into force of the new tax rules.
Management of a large Ukrainian real estate group engaged Jurimex to provide a legal opinion on the jurisdiction (Ukraine or Cyprus) which has the rights to tax a gain to be realized by the Cyprus shareholder on the contemplated sale of the shares in the Ukrainian property-rich companies according to Art. 13 of the Ukraine-Cyprus Tax Convention as amended by Art. 3 of the Protocol.
The International Tax and Cross-Border Transactions practice of Jurimex has successfully completed this engagement and promptly provided legal opinion on the requested tax matters.
As the result, the client, one of the key players on the Ukrainian real estate market, managed to present coherent and convincing arguments to support the legal position that the gain to be realized by the Cyprus shareholder on the contemplated sale of the shares shall be taxed in Cyprus, especially in the light of the existing uncertainties in the new version of Art. 13 of the Ukraine-Cyprus Tax Convention and absence of any practical application of this amended article by both businesses and tax authorities.