Payment of dividends to foreign investors is one of the most sensitive topics in corporate taxation in Ukraine. Currency market restrictions, changes in the National Bank of Ukraine’s (NBU) currency regulations, and updates in tax practices all impact the decisions of company owners. This article covers the current rules, profit distribution procedures, document requirements, and tax rates for 2025.
Dividend Payment Procedures After the End of the Financial Year
Dividend payments in Ukraine are made after the submission of financial statements for the previous year. For LLCs, the payment source is net profit, calculated according to accounting standards.
The law prohibits dividend payments:
- If there are insufficient funds to meet obligations to creditors.
- To participants who have not fully or partially contributed to the authorized capital.
The decision on payment is made by the general meeting of participants. Unless specified otherwise in the charter, payment must be made within 6 months of the decision.
Currency Regulation: Restrictions on Sending Dividends Abroad
Since the beginning of the war, the NBU significantly restricted foreign currency transfers. However, as of May 13, 2024, dividend payments to foreign investors are allowed under certain criteria.
As of 2025, the following rules apply:
- Dividends can only be paid based on the results of 2024. The transfer of funds from undistributed profits of previous periods is prohibited.
- The transfer is made exclusively by the issuer of corporate rights. Funds are sent directly to the investor’s account or via the depository system.
- The transfer limit is no more than 1 million euros per month, in equivalent.
- The issuing company must have been operating for at least 12 months since state registration.
- At least 6 months must have passed from the date the foreign investor acquired ownership of corporate rights.
If you need to verify your company’s compliance with these criteria or plan a dividend payout, contact our experts. We have extensive experience in dividend operations in 2024–2025.
Tax Consequences for the Company: A Rate of 15% or Less
According to paragraph 141.4.2 of the Tax Code of Ukraine, when paying dividends to a non-resident, the income tax is withheld at a base rate of 15% of the dividend amount. This rate may be reduced based on the applicable international tax treaty (DTA).
What to Check Before Payment:
- The tax residency country of the recipient.
- The existence of a DTA between Ukraine and the non-resident’s country.
- Whether the recipient is the beneficial owner of the income.
Documents Required to Reduce the Tax Burden
Preferential tax rates can only be applied if the full set of documents is provided:
1. Certificate of Tax Residency:
- Issued by the official tax authority of the non-resident’s country.
- Translated into Ukrainian.
- Apostilled or legalized (depending on the jurisdiction).
- Valid at the time of the payment.
2. Confirmation of Beneficial Ownership of the Income:
- Official letter from the non-resident.
- Certificate from the tax authority of the foreign jurisdiction.
- Audit report or another equivalent document.
Without these documents, the 15% tax rate applies.
Example: How the Reduced Rate Works
Suppose an LLC in Ukraine has a foreign participant from Cyprus. The dividend payment for 2024 amounts to 200,000 euros. If the investor holds at least 20% of the authorized capital or invested more than 100,000 euros, the tax rate is reduced to 5% according to the DTA between Ukraine and Cyprus.
Thus, the company (with one 100% owner) pays 10,000 euros in tax instead of 30,000 euros at the base rate.
International Agreements: Which Countries Are Covered by the DTA Network
As of 2025, Ukraine has over 70 active international double tax treaties. Agreements are in place with jurisdictions such as:
- Cyprus
- Poland
- Germany
- Netherlands
- United Kingdom
- Austria
- USA (the agreement has not been updated, but is still in use)
- UAE
- Canada, and others
Each agreement has its own conditions and rates. Some allow for the tax rate to be reduced to 5% or even 0%.
Currency Transaction Control: How the Bank Checks
Banks are required to check documents before transferring currency:
- A copy of the decision to pay dividends to the foreign investor.
- Copies of the LLC’s charter, in which the non-resident holds a stake.
- The certificate of tax residency.
To avoid delays, contact our team for a pre-check of all the necessary documents. The bank’s internal compliance may refuse to process the transaction even for minor violations.
New in 2025: Additional Risks and Trends
- Clarification of beneficial ownership criteria. The tax authority no longer accepts standard letters without details about ownership structure.
- Focus on transparency of the ownership structure. Legal entities registered in low-tax jurisdictions are checked separately.
- Enhanced currency control. The bank may require additional explanations about the sources of funds or profit generation.
- As of January 1, 2025, countries like Ireland, Cyprus, Moldova, North Macedonia, Bosnia, Madeira, Montenegro, Liechtenstein, and UAE are excluded from the list of low-tax jurisdictions.
Conclusion
In 2025, dividend payments to non-residents in Ukraine are possible, but require compliance with complex procedures. The NBU has made some concessions regarding dividend transfers, but significant restrictions remain. Properly prepared documents are crucial for reducing the tax burden.
Frequent changes in currency and tax rules require constant monitoring. When planning a dividend payout, it’s important not only to calculate the tax but also to assess the overall corporate group structure, confirm the right to dividends, and comply with the DTA.
Planning to pay dividends in 2025? Our experts will provide full legal and tax support— from structuring the deal to agreeing on documents with the bank. Contact us.
