Ukraine and Germany to Renew Double Taxation Agreement: What This Means for Businesses and Employees

Ukraine and Germany are preparing to update their double taxation agreement, which is intended to simplify business operations, attract new investment, and make tax rules more transparent. The new terms are also expected to have a positive impact on Ukrainians who work or run a business in Germany. Learn more about what changes may take effect in the near future and who they will affect

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Ukraine and Germany have begun preparations to update their double taxation agreement. Representatives of the German government announced their intention to revise the current rules on the eve of the G7 meeting. The main goal of the changes is to remove tax barriers for businesses, increase legal certainty, and create more favorable conditions for investment cooperation between the two countries.

For Ukraine, this issue is of particular importance in the context of post-war economic recovery and attracting foreign capital. At the same time, the new agreement could bring practical benefits to thousands of Ukrainians who work, invest, or do business in Germany.

What is double taxation and why does it occur?

Double taxation occurs when the same individual or company is required to pay taxes on the same income in two countries at once. This situation most often arises when working internationally, conducting business abroad, or receiving dividends, interest, royalties, or investment income.

For example, a Ukrainian citizen may work in Germany and receive a salary there. Without special international agreements, there would be a risk that this income would be taxed both in Germany, where it was earned, and in Ukraine, where the person remains a tax resident.

That is why most developed countries conclude double taxation avoidance agreements with one another. Such agreements specify:

- Which country has the right to tax a specific type of income

- How taxes already paid are credited

- What tax benefits may apply

- How disputes between the tax authorities of different countries are resolved

For international business, such agreements are no less important than trade agreements. They allow companies to plan investments, open representative offices, and operate in multiple markets without the risk of a double tax burden.

We previously reported onwhich European countries will have the highest business taxes in 2026.

Ukraine and Germany are preparing a new tax agreement

The German Ministry of Finance announced the preparation of the updated agreement. According to the German side, the new document is intended to strengthen economic cooperation between the countries, provide greater legal certainty for businesses, and create favorable conditions for investment in Ukraine’s reconstruction.

The final text of the agreement has not yet been made public, but international practice shows that when updating such documents, countries typically take into account current requirements regarding tax transparency, the digital economy, and the fight against tax evasion.

Possible areas for modernizing the agreement include:

- Updating the rules for determining tax residency

- Clarifying the taxation of dividends, interest, and royalties

- Improving mechanisms for the exchange of tax information

- Strengthening investor protection against double taxation

- Harmonizing certain provisions with current OECD standards

It is particularly important that the agreement is being updated at a time when Germany remains one of Ukraine’s largest trading partners in Europe. According to the German government, the country also plays a key role in financing programs to rebuild Ukraine’s economy, infrastructure, and industry.

For companies, this means greater predictability when planning investment projects, and for entrepreneurs—fewer risks of facing double taxation or conflicting interpretations of tax rules across different jurisdictions. The German Ministry of Finance also emphasizes the need to establish clear and understandable rules for business.

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What benefits will Ukrainians working in Germany receive?

In recent years, Germany has become one of the main countries of residence and employment for Ukrainians. Many citizens work under employment contracts, engage in entrepreneurial activities, invest, or receive income simultaneously from multiple sources in different countries. In such situations, the issue of taxation becomes particularly important.

The updated agreement is intended to make tax rules more understandable and predictable. This will help avoid situations where a person is unsure in which country they should report their income and where exactly they should pay taxes.

For Ukrainians, this could mean:

- Fewer risks of double taxation on income

- Clearer rules for determining tax residency

- Simplified verification of taxes already paid

- Fewer bureaucratic procedures when filing tax returns

- Better protection of taxpayers’ rights in the event of disputes between the tax authorities of the two countries.

This issue is particularly relevant for professionals working remotely for international companies, business owners, consultants, and investors. With the rise of remote work, more and more people are receiving income from foreign employers or conducting business in multiple jurisdictions simultaneously, which often creates complex tax issues.

In addition, more transparent rules can have a positive impact on the labor market as a whole. The German Ministry of Finance emphasizes that the new agreement will promote the development of economic ties between the countries and remove unnecessary barriers to cooperation. This, in turn, can stimulate the creation of new jobs and the launch of joint Ukrainian-German projects.

Why is the agreement important for Ukraine’s economic recovery?

Once the war ends, Ukraine will need hundreds of billions of dollars in investment to rebuild its housing stock, transportation infrastructure, energy sector, industry, and social facilities. In such a situation, international businesses focus not only on market potential but also on the stability of the legal and tax environment.

This is precisely why the renewal of the double taxation agreement is of strategic importance. It is crucial for foreign investors to understand in advance exactly how their income, dividends, interest on loans, or profits from investment projects will be taxed.

Legally clear rules create several important advantages:

- They increase international companies’ confidence in the Ukrainian market;

- They simplify the launch of long-term investment projects;

- They reduce the risks of double taxation for investors;

- They improve conditions for financing reconstruction projects;

- Promote the development of Ukrainian-German economic partnership.

Germany is already one of Ukraine’s key partners in the areas of financial, humanitarian, and technical assistance. Many German companies are considering participation in future reconstruction projects, particularly in the energy, construction, engineering, and transportation sectors.

This is precisely why the German government emphasizes that the new tax agreement must provide greater legal certainty and remove financial barriers for investors. This could be one of the practical steps toward more actively involving German businesses in Ukraine’s reconstruction and the development of bilateral economic cooperation.

If you are planning to open or relocate a business in Europe, it is important to consider not only tax rates but also legal nuances that can affect costs and risks. The business lawyers at Visit Ukraine will help you choose the optimal jurisdiction, analyze the tax burden, prepare the necessary documents, and guide you through the company registration process. Thanks to their practical experience and knowledge of European legislation, you will be able to avoid mistakes and launch your business quickly and without unnecessary risks.

The professional support of Visit Ukraine lawyers will help you minimize risks, avoid bureaucratic obstacles, and choose the most advantageous jurisdiction for your business.

We remind you! The Czech Republic is tightening the requirements for the ‘Blue Card’ for foreign specialists in 2026. Find out what the minimum salary requirement is, who will be affected by the changes and how this will impact Ukrainians.

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