42.99 million UAH of additional payments: the Supreme Court supported position of the State Tax Service on taxation of dividends paid to the non-residents

Press service of the State Tax Service of Ukraine, published 21 September 2026 at 10:07 Chapter: News

The Supreme Court supported position of the State Tax Service regarding additional accrual of 42.99 million UAH of tax liabilities in case of dividends taxation paid to a company resident in the Netherlands.

The court concluded that acquisition by the non-resident of existing corporate rights from the previous owner does not constitute investment directly into the capital of the company paying dividends. Therefore, there were no grounds for applying zero tax rate provided for by the Convention between Ukraine and the Kingdom of Netherlands for avoidance of double taxation in this case.

During the audit, the State Tax Service established that the taxpayer applied zero rate to dividends paid to the company resident in the Netherlands. Taxpayer considered acquisition of corporate rights by the non-resident in 2015 as an investment in the company’s capital according to provisions of the Convention to be the basis for this. At the same time, it was a question of acquisition of already existing corporate rights from the previous owner, and not of contributing funds directly to the capital of the company, which subsequently paid dividends.

In this regard, the controlling authority the amount of the non-resident’s income tax liability by 42.99 million UAH, of which 34.39 million UAH is the principal payment and 8.60 million UAH is penalties.

While considering the case, the panel of judges of the Cassation Administrative Court within the Supreme Court drew attention to the fact that the mere fact of acquiring corporate rights is not sufficient for application of the zero rate according to Sub-paragraph "i" Paragraph 3 Article 10 of the Convention.

Convention provides for a set of conditions. In particular, the company resident in the Netherlands must own at least 50 percent of the capital of the company paying dividends, and investment of at least 300 thousand US dollars must be made in the capital of this company.

The court also noted that although Ukrainian legislation refers to the acquisition of corporate rights as investment transactions, in this case the decisive provision is provision of the international treaty that establishes a special requirement for investment to be made specifically in the capital of the company paying dividends.

The Supreme Court agreed with argumentations of the State Tax Service and overturned decisions of the courts of previous instances, which equated contract of sale (assignment) of corporate rights to the investment in capital.

For reference.

Supreme Court ruling:

https://reyestr.court.gov.ua/Review/139534643