According to sub-para.162.1.2 of the Tax Code of Ukraine (hereinafter − TCU), an individual − non-resident receiving incomes from the source of their origin in Ukraine is a payer of the personal income tax (hereinafter – PIT). Since the war tax has the same object of taxation as the PIT, the war tax is also withheld from the dividends accrued to an individual, even if he/she is not a resident of Ukraine. Thus, dividends accrued in favour of an individual non-resident are the subject to the PIT and the war tax.
Procedure for the taxation of dividends accrued to non-residents
Procedure for the taxation of dividends accrued in favour of individuals − non-residents is similar to the procedure of taxation of dividends accrued in favour of individuals – residents (sub-para. 170.10.1 TCU).
That is, the PIT rates of 9 and 5% and the war tax in the amount of 1.5% are withheld when the calculation and payment of dividends to non-residents.
However, this is possible provided that the international agreement does not provide otherwise. If the international agreement of Ukraine provides for the exemption (reduction) from taxation of incomes from the source of their origin from Ukraine, the basis for such exemption is the provision by a non-resident of a certificate or a notarized copy confirming that a non-resident is a resident of the country with which Ukraine has concluded an international agreement as well as other documents (para. 103.4 of TCU).
A special feature of the taxation of dividends accrued in favour of a non-resident in foreign currency is the currency recalculation.
Even if non-residents receive dividends in foreign currency, the personal income tax and the war tax must be paid to the budget in hryvnias. In this case, the calculation of the personal income tax and the war tax should be carried out using the rate of the National Bank, current at the time of dividends accrual. In addition, regardless of the date of payment of the PIT and the war tax, their amounts should be calculated once and are not the subject to further adjustment when changing the NBU rate. Exchange differences arising on the date of transfer of dividends in foreign currency to a non-resident, the company should include them into incomes or expenses.
