Ukraine and Germany signed new double taxation agreement

On 19 May 2026 in Paris, Ukraine’s Minister of Finance Sergii Marchenko and Germany’s Vice Chancellor, Federal Minister of Finance Lars Klingbeil signed the Agreement between Ukraine and the Federal Republic of Germany on the Avoidance of Double Taxation with Respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance.

The Agreement was also signed on behalf of the German side by Ms. Gudrun Lingner, Chargé d’Affaires ad interim of the German Embassy in Paris.

The new Agreement marks an important step in modernizing the legal and treaty framework between Ukraine and Germany in line with current international taxation standards. It is expected to foster bilateral economic and investment cooperation.

The document establishes clear rules for the allocation of taxing rights between the two states, aims to eliminate double taxation, prevent tax evasion and avoidance, and create stable and predictable conditions for doing business.

“Signing the new Agreement with Germany is an important step toward deepening economic cooperation between our countries. The document creates more transparent, fair, and predictable tax conditions for businesses and investors, while also strengthening the ability of both states to counter tax abuses. At the same time, the updated approaches to the taxation of passive income are aligned with Ukraine’s national economic interests and modern international standards,” said Minister of Finance of Ukraine Sergii Marchenko.

Once it enters into force, the new Agreement will replace the current Ukraine-Germany Double Taxation Agreement signed on 3 July 1995.

Key changes introduced by the new Agreement

The Agreement updates taxation approaches in accordance with OECD standards and introduces revised withholding tax rates on passive income in the source state.

Taxation of dividends:

• The 5% rate is retained for dividends paid to a company resident in the other contracting state that directly holds at least 20% of the capital of the paying company;
• The rate is increased from 10% to 15% in all other cases.

Taxation of interest:

• The rate is increased from 2% to 5% for interest paid on credit sales and on loans granted by banks and financial institutions.

Taxation of royalties:

• The zero withholding tax rate for certain types of royalties is abolished;
• A general withholding tax rate of 5% is introduced.

The new Agreement also includes provisions on:

• preventing the abuse of tax treaty benefits;
• expanding the exchange of tax information between the competent authorities of Ukraine and Germany;
• introducing dispute resolution mechanisms to better protect taxpayers’ rights.