Certificate from a non-resident in accordance with Article 103 of the TCU: form, legalization, translation
The State Tax Service of Ukraine informs that in case of payment of income to a non-resident, if such non-resident is a beneficial (actual) recipient (owner) of income (if the relevant condition is provided for by an international treaty) and is a resident of a country with which Ukraine has concluded an international treaty, the non-resident may submit a certificate to confirm his or her residency status in order to be exempt from taxation or apply a reduced tax rate.
Pursuant to paragraph 103.2 of the TCU, a person (tax agent) has the right to independently apply for tax exemption or a reduced tax rate provided for by the relevant international treaty of Ukraine at the time of payment of income to a non-resident, if such non-resident is the beneficial (actual) recipient (owner) of the income (if the relevant condition is provided for by the international treaty) and is a resident of the country with which the international treaty of Ukraine is concluded.
In the case of a syndicated financial loan, a person (tax agent) applies the tax rate provided for by the relevant international treaty of Ukraine on the date of payment of interest or other income derived from sources in Ukraine to the members of the lender syndicate, taking into account the jurisdiction of each member of the syndicated loan and in proportion to its share in the loan agreement, provided that it is the beneficial (actual) recipient (owner) of the income, regardless of whether the payment is made through an agent or directly.
The procedure for the application of the international treaty of Ukraine for the avoidance of double taxation with respect to full or partial exemption from taxation of income of non-residents with their source of origin in Ukraine is provided for in Article 103 of the TCU.
Pursuant to paragraph 103.4 of the TCU, the basis for exemption (reduction) from taxation of income originating in Ukraine is the submission by a non-resident, subject to the peculiarities provided for in paragraphs 103.5 and 103.6 of this Article, to the person (tax agent) paying the income to the non-resident, of a certificate (or a notarized copy thereof) confirming that the non-resident is a resident of a country with which Ukraine has concluded an international treaty, as well as other documents, if provided for by an international treaty of Ukraine.
Pursuant to clause 103.5 of the TCU, the certificate is issued by the competent (authorized) body of the relevant country, as defined by the international treaty of Ukraine, in the form approved in accordance with the legislation of the relevant country, and must be duly legalized and translated in accordance with the legislation of Ukraine.
A certificate of tax status of a non-resident is issued by the competent (authorized) authority of the non-resident's country. In the context of Article 103 of the TCU, the competent authority is determined in accordance with the provisions of international treaties concluded by Ukraine with other countries. In other words, such competent (authorized) authorities are the Ministry of Finance/tax service of the respective contracting state or an authorized representative of these state authorities.
It is important to note that the form of the certificate of tax status of a non-resident does not have a universal form; in each case, this form is approved by the authority of the relevant foreign country in accordance with its legislation. In other words, there is no standardized form for issuing a certificate of non-resident tax status, however, each such certificate (certificate, etc.) usually contains the following elements
- Name of the taxpayer.
- Tax year for which the certificate was issued.
- Date of issue of the document.
- Signature of the authorized person who is authorized to issue the certificate.
- A statement that the said taxpayers are residents within the meaning of the relevant double taxation treaty.
Please note that the TCU does not provide for the possibility of using a certificate confirming the tax status of a non-resident provided in electronic form for the purpose of applying the benefits of an international treaty in terms of tax exemption or application of a reduced tax rate.
To be recognized as valid in Ukraine, the certificate must undergo a legalization procedure.
Legalization of foreign documents is a procedure that ensures the recognition of the legality and authenticity of official documents issued in another country in the territory of the state where they are to be used. This procedure is governed by international and domestic legal regulations. The method of legalization of the certificate depends on the country of residence of the person receiving income, namely: consular legalization, apostille, or without any confirmation (i.e. without consular legalization and without apostille).
The procedure for consular legalization of official documents is established by the Vienna Convention on Consular Relations of 1963, international treaties and current legislation of Ukraine, as well as the Instruction on the Procedure for Consular Legalization of Official Documents in Ukraine and Abroad, approved by Order of the Ministry of Foreign Affairs of Ukraine No. 113 dated 04.06.2002 (hereinafter - the Instruction).
Thus, according to the Instruction, consular legalization of official documents is a procedure for confirming the validity of the originals of official documents or certifying the authenticity of signatures of officials authorized to certify signatures on documents, as well as the validity of stamps and seals that seal the document.
Consular legalization is a confirmation of compliance of documents with the legislation of the state of their origin and is a certification of the authenticity of an official's signature, his/her status and the seal of an authorized state body on documents and acts for their further use in the territory of another state. Consular legalization of documents may be carried out either in the territory of the state that issues the document or in the territory of the state where the document is used.
On December 22, 2003, the Hague Convention Abolishing the Requirement of Legalization of Foreign Public Documents of 1961 (the "Hague Convention") entered into force for Ukraine.
Official documents to be used in the territory of the states parties to the Hague Convention must be certified by a special stamp "Apostille" (hereinafter referred to as "apostille") affixed by the competent authority of the state in which the document was drawn up and do not require any further certification (legalization).
Most countries in the world, including the European Union, the United States of America, Australia, Japan, India and many others, are parties to the Hague Convention and recognize the apostillization procedure for legalization of documents among themselves.
The Hague Convention establishes a single sample apostille, which has a standardized format and contains the necessary details to confirm the authenticity of official documents issued in the countries party to the Hague Convention.
Official documents bearing an apostille do not require any further certification (legalization).
In accordance with part two of Article 3 of the Hague Convention, compliance with the apostille procedure may not be required by the states parties to the Convention if there are agreements between two or more states that abolish or simplify this procedure or exempt the document itself from legalization.
Until 29.12.2023, Ukraine was a party to the Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters of January 22, 1993 (hereinafter referred to as the 1993 Convention). According to the conclusion of the Ministry of Justice of Ukraine, documents of tax authorities of foreign countries that are parties to treaties on legal assistance and legal relations in civil, family and criminal matters should have been accepted in the territories of the Contracting Parties without any additional certification.
According to the Ministry of Foreign Affairs of Ukraine, the 1993 Convention and its Protocol have been terminated for Ukraine since December 29, 2023 (letter of the Ministry of Foreign Affairs of Ukraine dated January 06, 2023 No. 72/14-612-2008).
Thus, from the date of termination of the 1993 Convention in relations with the Russian Federation and the Republic of Belarus, documents issued in the territory of these countries, when presented in Ukraine, will be subject to the requirement of apostille certification in accordance with the 1961 Convention Abolishing the Requirement of Legalization of Foreign Public Documents, which remains in force in Ukraine's relations with the Russian Federation and the Republic of Belarus.
In relations with the Republic of Azerbaijan, the Republic of Armenia, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Tajikistan, and Turkmenistan, the 1993 Convention was in force until the date of Ukraine's withdrawal, i.e., until 29.12.2023.
Bilateral international treaties are in force with the Republic of Moldova, the Republic of Uzbekistan and the Republic of Georgia, under which foreign official documents may be accepted in Ukraine without additional certification.
According to the clarification on the application of international treaties of Ukraine on legal assistance in the part concerning the abolition of the requirement to legalize foreign official documents (letter of the Ministry of Justice of 12.02.2021 No. 1326/12.1.1/26-21), the existence of the relevant provisions cannot be interpreted as automatically providing for the acceptance by the competent authorities of Ukraine without any additional certification of all official documents drawn up by the authorities of foreign states that are parties to such treaties.
The exemption of official documents from the requirement of legalization or other additional certification (apostille) based on the relevant provisions of international treaties of Ukraine does not cancel the requirement to provide a certified translation of the document into the official language of the state in which the document is presented or will be used.
Therefore, tax residency certificates submitted to the tax authorities must comply with the requirements of official documents and be translated into the official language. The translation must be notarized. If the notary does not speak the relevant language, the translation may be done by a translator, and the translator's signature shall be confirmed by the notary (Article 79 of the Law of Ukraine On Notaries).
However, the translation of a notarized copy of a certificate confirming that a non-resident is a resident of a country with which Ukraine has concluded an international treaty does not have the same legal force as the original. The authenticity of the copy of the certificate (authenticity, compliance with the original) must be certified.
Regarding the validity of the certificate, the legislation of Ukraine stipulates that a person who pays income to a non-resident in the reporting (tax) year, in case the non-resident submits a certificate with information for the previous reporting tax period (year), may apply the rules of an international treaty of Ukraine, in particular regarding exemption (reduction) from taxation, in the reporting (tax) year with the receipt of the certificate after the end of the reporting (tax) year (paragraph 103.8 of the TCU)
The certificate must be available to the tax agent at the time of payment of income, as it is one of the grounds for exemption from taxation of non-resident income at the time of payment.
A person who pays income to a non-resident in the reporting (tax) year, if the non-resident provides a certificate with information for the previous reporting tax period (year), may apply the rules of an international treaty of Ukraine, in particular, regarding exemption (reduction) from taxation, in the reporting (tax) year with the receipt of the certificate after the end of the reporting (tax) year. Thus, the certificate is valid for the calendar year in which it is issued.
If a non-resident fails to submit the certificate, the non-resident's income with the source of its origin in Ukraine is subject to taxation in accordance with the tax legislation of Ukraine (clause 103.10 of the TCU).
