The State Fiscal Service published Guidance Letter No. 722/6/99-99-01-02-02-15/IPK on 19 July 2017 clarifying the royalty withholding tax paid by a US distributor to a Ukrainian software copyright holder.
Ukraine’s State Fiscal Service (“SFS”) discussed different arrangements between the software copyright holder and the software distributor and the extent to which a payment to each would qualify as a royalty under Article 12 of the Ukraine – United States treaty and be subject to a 10% withholding tax.
The letter noted that to claim treaty benefits a non-resident entity needs to provide the tax agent with a document confirming residency in a treaty country. For a US entity making payments to a Ukrainian software copyright holder, IRS Form 6166 would work to establish US tax residency.