JURIDICA INTERNATIONAL 24/2016
Leonid Tymchenko Pavlo Selezen
Professor, Head of Project Associate Professor,
Research Institute of Senior Research Fellow
Financial Law, Ukraine Irpin, Kiev Region, Ukraine
The Concept of Beneﬁ cial
Owner in Application
of the Ukrainian Double
The provisions on beneﬁ cial owner status in the national legislation of Ukraine appeared at the dawn of
the country’s independence. According to Article 7 of the Law on Succession (1991), Ukraine is a successor
taking on rights and obligations under international treaties of the USSR unless they contradict its consti-
tution and the interests of the republic.*1 Such a position of national legislator determined the inclusion of
the double taxation treaties of the former USSR in the Ukrainian legal system in 1991. Most of these treaties
contained provisions on beneﬁ cial ownership pertaining to the taxation of passive income at the moment
of their recognition as a part of the Ukrainian legal system. Nevertheless, the provisions on beneﬁ cial own-
ers in double taxation treaties had not been referred to in tax disputes until the moment of the Tax Code of
Ukraine taking eﬀ ect, in 2011. They allow the use of provisions related to the status of beneﬁ cial owner in
the process of giving access to treaty beneﬁ ts.
The changing nature of the concept of beneﬁ cial owner, its importance as an instrument for counterac-
tion of treaty shopping, and the necessity of improvement of its application in the Ukrainian reality are the
main factors that have a strong impact on the development of the concept of beneﬁ cial owner in Ukraine.
This article focuses on the issues of normative basis and court interpretation of ‘beneﬁ cial owner’ in tax
treaty disputes. The objective for the article is to characterise modern tendencies and the main obstacles in
application of the national provisions on beneﬁ cial owners since the adoption of the Tax Code of Ukraine.
2. The appearance of the concept of
beneﬁ cial owner in the Tax Code of Ukraine
Article 103 (2) of the Tax Code of Ukraine states that a person (tax agent) has a right to use tax exemption
or to lower his or her tax rate in accordance with the provisions of a double taxation treaty of Ukraine in
Қ ро правонаступництво краіни [‘Law on succession of Ukraine’]. – З У No. ҚҞҝҜ-XII, Ққ.Ң.ҚҢҢҚ. Available
at http://zakonқ.rada.gov.ua/laws/show/ҚҞҝҜ-Ққ (most recently accessed on ҚҠ.Ҡ.қҙҚҞ) (in Ukrainian).