Ukraine and Australia have agreed to avoid double taxation: what will change for salaries, pensions and business

The Verkhovna Rada of Ukraine ratified the Convention between Ukraine and Australia on the Avoidance of Double Taxation of Income. The document defines the rules for taxation of salaries, pensions, business profits and other income of citizens and companies that have financial ties with both states.

The corresponding bill No. 0382 provides for the ratification of the Convention and the Protocol thereto, signed on October 16, 2025 in Washington.

What does the agreement between Ukraine and Australia provide for?

The main purpose of the document is to prevent situations when the same income is taxed simultaneously in two countries.

The Convention establishes the rules for the distribution of tax powers between Ukraine and Australia and defines mechanisms for the elimination of double taxation.

Its provisions apply to various types of income, including:

salaries and income from employment;

pension payments;
corporate profits;

dividends;
interest;
royalties;
income from real estate;
director’s fees;
certain student income.

It is assumed that the new rules will create clearer tax conditions for Ukrainians who work, study or do business in Australia.

What tax rates are provided?

The Convention establishes maximum tax rates for certain income in their country of origin.

In particular:

Dividends – 5%, if the recipient owns at least 10% of the voting rights in the company paying them.

Dividends – 15% in other cases.
Interest – 5% for financial institutions.
Interest – 10% in other cases.
Royalties – 10%.

The application of these rates is possible provided that the recipient is the beneficial owner of the income, has the appropriate tax resident status and meets other requirements of the Convention.

The document also provides for certain cases of exemption from taxation of dividends and interest received by states, central banks and certain categories of pension funds.

How will the salaries of Ukrainians be taxed in Australia?

According to the provisions of the Convention, income from employment will, as a rule, be subject to taxation in the state where the work is actually performed.

At the same time, the specific procedure for taxation will depend on the circumstances of employment, the tax residency of the person and the terms of an international agreement.

If, according to the Convention, income is subject to taxation in both countries, a mechanism for crediting tax paid in another state is provided.

This will reduce the risk of double taxation of the same income.

What will change for pensioners?

The Convention also regulates the issue of taxation of pension payments.

This is important for Ukrainians living in Australia and receiving pension income, as well as for individuals who have tax obligations to both states.

Depending on the type of pension and the provisions of the Convention, it will be determined which state has the right to tax the relevant payments.

At the same time, ratification of the agreement does not mean automatic exemption of all pensions from taxes.

What benefits will business receive?

For companies engaged in economic activity between Ukraine and Australia, the Convention provides for more specific taxation rules.

In particular, the profit of an enterprise of one state, as a rule, will be taxed in another only if there is a permanent establishment there.

The document also regulates the taxation of dividends, interest, royalties and other income arising from international transactions.

It is expected that this will help reduce tax risks and the number of potential disputes between taxpayers and regulatory authorities.

When will the new rules come into effect?

Despite the ratification of the Convention by the Verkhovna Rada, its provisions have not yet entered into force.

For this, it is necessary to complete the relevant domestic procedures and exchange official notifications between Ukraine and Australia through diplomatic channels.

Only after these conditions are met will the international agreement enter into force in accordance with the established procedure.