How to continue paying taxes abroad in Ukraine to avoid double taxation: an explanation by a lawyer

Many Ukrainians who went abroad to escape the war continued to work remotely for a Ukrainian employer. By the way, last summer in Poland they announced that refugees could not pay taxes for six months from the moment of entry, but in the fall of 2022 this period was extended.

However, as RBC-Ukraine writes, the situation with individual entrepreneurs is somewhat different. About how Ukrainian sole proprietors pay taxes abroad, told Stron Legal Services lawyer Alena Paly.

According to her, the registration of a citizen as an individual entrepreneur is an independent unconditional sign of the “tax residency” of Ukraine, but does not exclude the recognition of a person as “tax residents” of another country, which increases the risk of double taxation.

After all, the current form of the declaration of the single tax payer does not provide for the possibility of crediting foreign tax on account of the payment of the single tax:

• payment in Ukraine of a single tax at a rate of 2% or 5%;

• payment of tax in the host country.

“You can get out of this situation by submitting a certificate confirming the status of a “tax resident” of an individual entrepreneur in Ukraine to the tax authorities of the host country. This is necessary to avoid taxes there.advises the lawyer.

You can confirm your status as a “tax resident” of Ukraine by obtaining a relevant certificate from the Ukrainian tax authorities, which is sufficient to confirm your “tax residency” in Ukraine, in the sense of the Double Taxation Conventions.

To avoid double taxation already in Ukraine, paying taxes in another country, she recommends filing an application for exemption from taxation of income from sources in a foreign country or an application for a refund of taxes already paid in a foreign country.

Applications are submitted according to the forms approved by the competent authority of the respective country, with translation into Ukrainian. The tax authorities of Ukraine are required to confirm the status of a tax resident in these forms with the signature of the head of the tax inspectorate and the seal.

Earlier, the Office of the Commissioner of the Verkhovna Rada for Human Rights noted that Ukrainians receiving social benefits abroad must declare them. However, the tax on this foreign income and the military tax is not required to be paid in this case.

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