taxation of seafarers’ income in ukraine

TAXATION TAXATION

OF SEAFARERS’ INCOME IN UKRAINEOF SEAFARERS’ INCOME IN UKRAINE

INTERNATIONAL CREWING CONFERENCE

Speaker – Artyom Volkov

Senior Lawyer, Attorney-at-law

Head of Maritime Law Practice

ANK Law Office

PAYERS OF INCOME TAX

UNDER UA LAW Individuals – residents, who urn income from Ukraine and foreign countries as sources of funds;

Individuals – non-residents, who urn income from Ukraine as source of funds;

Tax agents (e.g. employer).

TAX RESIDENCE FOR INDIVIDUALS

Place of living in Ukraine OR

Permanent residence in Ukraine for 183 days OR

Citizenship of Ukraine

INCOME TAX RATES

GENERAL RATE – 15%

up to USD 1 430 (as of 01.01.2013) income per month

SPECIAL RATE – 17%

if monthly income exceeds USD 1 430 (as of 01.01.2013) amount in excess shall be taxed under 17%

INCOME DECLARATION

Term of Declaration Filing – till May 1

Declaration can be filed earlier

FOREIGN INCOME

Foreign income shall be declared and taxed in Ukraine except foreign income that should not be taxed

due to the provisions of Tax Code and Double Taxation Avoidance Agreements

Double Taxation Avoidance Agreement

UKRAINE CONCLUDED

Double Taxation Avoidance Agreements with 49 countries among which are:

• United Kingdom

• Netherlands

• Germany

• Turkey

• China

• Belgium

• USA

• Italy

• Portugal and others

Paying of the Foreign Income Tax in other country should be proved by the relevant reference

issued by Tax Authorities

TAXATION OF OTHER PAYMENTS IN SEAFARERS FAVOR

Loss of Life Compensation

Disability Compensation

Sick Pay

Control of Seafarers’ Tax Paying

Crewing Agencies as

Seafarers’ Tax Agents (?)

Crewing Agencies cannot be a Tax Agent

Because they are not Employers

PENSIONS FOR SEAFARERS

Many Employers (mostly from EU) pays seafarers’ fees to the social (pension)

funds of country of incorporation

International Agreements on Mutual Pension Provision

Mostly concluded with former USSR countries (e.g. Russia, Belarus, Georgia, Moldova) and

Eastern Europe countries (e.g. Latvia, Lithuania, Poland, Czech Republic, Slovakia)

SOLUTION APPROACH

Solidary System of Retirement Insurance

MAIN STAGES:

I – Application filing II – Concluding of Agreement

III – Paying of Insurance Fees

Funded System of Retirement Insurance

May be realized by one of the following forms:

1. Individual Saving Fund in Pension Fund of Ukraine; 2. Individual Saving Fund in non-government pension fund; 3. Insurance Agreement of Life Pension; 4. Pension deposit in bank

THANK YOU FOR YOUR ATTENTION