In brief
As of November 2026, a Ukrainian company pays corporate tax of 18% on profit, or simplified tax of 3% or 5% of income if it meets the conditions. A dividend to a foreign company is subject to 15% withholding tax, and under the tax treaty with Israel it falls to 5% for an Israeli company holding at least 25% of the capital. Under martial law, transferring dividends abroad is permitted for profits from 2023 onwards subject to a monthly limit of one million euros, with additional routes. In Israel the dividend is taxed again, with a credit for the Ukrainian tax.
Key takeaways
- 1Corporate tax: 18%. Financial institutions 25% from 2025, and banks 50% for 2023, 2024 and 2026.
- 2Simplified tax, group 3: 5% of income, or 3% plus VAT, up to 1,167 minimum wages (10,091,049 hryvnia in 2026). Not available when companies outside the regime hold 25% or more of the capital.
- 3Withholding tax for a foreign company: 15% on dividends, interest and royalties. Under the treaty with Israel: dividends 5% or 15%, interest 5% or 10%, royalties 10%.
- 4VAT 20%, mandatory registration threshold one million hryvnia in 12 months.
- 5Transferring a dividend abroad: profits accrued from 1 January 2023, up to one million euros a month, plus further routes for capital and foreign loans.
- 6In Israel: a company pays 23% on a dividend from abroad with a credit; an individual pays 25%, or 30% as a substantial shareholder (10%+), with a credit and reporting on Form 150.
This guide is intended for Israeli business owners who hold a company in Ukraine, or are considering setting one up, and want to understand how much tax is paid there, how profits are transferred to Israel under martial law and what is reported in Israel. It does not replace tax advice, and it is advisable to coordinate any structure with an accountant in Ukraine and in Israel.
How much corporate tax does a company in Ukraine pay in 2026?
As of November 2026, according to PwC Tax Summaries, the general rate is 18% of taxable profit. Financial institutions that are not insurance companies pay 25% from 1 January 2025, and banks pay a temporary rate of 50%. Alongside the regular regime there are special regimes.
| Regime | Rate | Suitable for | Note |
|---|---|---|---|
| Regular corporate tax | 18% of profit | The default for every company | Mandatory for a company in which an Israeli company holds 25% or more |
| Simplified tax, group 3 | 5% of income, or 3% plus VAT | A small company with income up to 10,091,049 hryvnia (2026) | Not available to certain sectors and certain ownership structures |
| Diia City | An alternative of 9% on profit distributed or withdrawn from the company, instead of 18% | Technology companies meeting the regime's conditions | A dedicated regime with residence and employee conditions |
| Defence City | Conditional exemptions from corporate tax and local taxes | Defence industries, under Law 4577-IX | In force from 5 October 2025, until 2036 or until EU accession |
Under article 291 of the Ukrainian Tax Code, a company in which legal entities that are not simplified taxpayers hold 25% or more of the capital cannot be in group 3. A subsidiary of an Israeli company will therefore pay corporate tax of 18%. A company owned by Israeli individuals may meet the condition, subject to the other conditions.
Which VAT rules are important to know?
As of November 2026, according to PwC Tax Summaries, the general VAT rate in Ukraine is 20%, and registration is mandatory once taxable supplies exceed 1 million hryvnia over 12 months.
- Rates: 20% standard rate, 14% for certain agricultural products, 7% for medicines, medical equipment and accommodation, and 0% for exports and international transport.
- Registration threshold: taxable supplies of one million hryvnia in the last 12 months. Voluntary registration is possible earlier.
- Reporting: a monthly return within 20 days of month end, and payment within 10 days of the filing deadline.
- A foreign company without a presence: a foreign supplier of digital services to private consumers in Ukraine registers for VAT under a special regime above one million hryvnia a year, and does not receive input tax refunds.
How much tax is withheld on a dividend to an Israeli owner?
A dividend paid to an Israeli company holding at least 25% of the capital of the distributing company is subject to 5% withholding tax under the Israel-Ukraine tax treaty, and 15% in other cases (as of November 2026, according to PwC Tax Summaries). Under Ukrainian law, a dividend paid to a foreign company is subject to 15% withholding, and the treaty, signed in Jerusalem on 26 November 2003, reduces it.
| Type of payment | Withholding under Ukrainian law for a foreign company | Maximum rate under the treaty with Israel | Main condition |
|---|---|---|---|
| Dividend | 15% | 5% or 15% | 5% for a company holding at least 25% of the capital; 15% in other cases |
| Interest | 15% | 5% or 10% | 5% for interest on a bank loan; 10% in other cases |
| Royalties | 15% | 10% | - |
To benefit from the treaty rate, the recipient must be the beneficial owner of the income and present the paying company with a certificate of Israeli tax residence. According to PwC, the Ukrainian tax authorities examine substance: an Israeli company without employees, assets or decision-making authority may be treated as a conduit, and there is also a principal purpose test.
A dividend from a Ukrainian company that pays corporate tax is taxed for an individual at 5% income tax, and since 1 December 2024 a 5% military levy also applies to it. The military levy is not a regular income tax, and it is not clear that the treaty limits it or that Israel will give a credit for it. This is worth checking before choosing to hold the company as an individual or through an Israeli company.
Can the dividend be transferred to Israel under martial law?
Yes, with restrictions. Resolution 18 of the National Bank of Ukraine (NBU) from 2022 prohibits transfers abroad unless expressly permitted, and it has been amended many times. As of November 2026, according to the summaries we reviewed, dividends accrued from activity from 1 January 2023 onwards may be transferred to foreign owners, subject to a base limit of one million euros a month, monitored through the electronic limits system.
| Route | What it permits | Source |
|---|---|---|
| Base limit | Dividends accrued from 1.1.2023, up to one million euros a month | Resolution 95 of 5.8.2025 and earlier amendments |
| Investment limit | Transfer beyond the base limit, up to the amount of foreign currency capital injected from abroad from 12.5.2025 | Amendments of May and August 2025 |
| Loan limit | Transfer beyond the limit, up to the amount of foreign currency loans received from abroad after 1.1.2026, through the same bank | Resolutions 2 and 3 of 13.1.2026 |
| Change of legal form | Dividends from 1.1.2024 after a change of legal form | Resolution 90 of 10.8.2026 |
The restrictions apply to the Ukrainian company and its bank, not to the Israeli company. A financing structure built in advance, for example a capital injection or a loan from abroad through the right bank, can increase what may be transferred later. The rules change several times a year, so check them with the bank before every distribution decision. See also transferring funds from Ukraine to Israel.
What happens in Israel when a dividend arrives from Ukraine?
In Israel the dividend is taxed again, with a credit for the tax withheld in Ukraine: as of 2026, under the Income Tax Ordinance, an Israeli company generally pays 23%, and an individual pays 25%, or 30% as a substantial shareholder.
- Israeli company: a dividend from abroad is generally taxed at 23%, with a credit for the tax withheld in Ukraine. In certain conditions it is also possible to elect an indirect credit for the corporate tax paid by the Ukrainian company.
- Israeli individual: a dividend from a foreign company is taxed at 25%, or 30% for a substantial shareholder (section 125B of the Income Tax Ordinance), with a credit up to the amount of Israeli tax on the same income. Excess credit can be carried forward to the next five years.
- Israeli surtax: as of 2026, surtax also applies to income above ILS 721,560 a year.
- Reporting: a declaration of a holding in a foreign resident body of persons (Form 150) is attached to the annual return.
For details see tax for an Israeli investor in a foreign project company and Israel's tax treaties by country.
Do the controlled foreign company rules apply to a Ukrainian company?
Usually not, where the company pays 18% corporate tax and is engaged in active trading or services. The Israeli controlled foreign company (CFC) rules (section 75B of the Income Tax Ordinance) apply, as a rule, to a company most of whose income or profits are passive, the tax on which abroad does not exceed 15%, and which is controlled by Israeli residents. A Ukrainian company paying 18% corporate tax that is engaged in active trading or services is usually outside the rules. A company that holds properties for rent, or is on the simplified tax regime on income, needs to be checked, because its effective tax rate may be low.
Salary or dividend: which is better for an Israeli director?
The answer depends on where the director actually works. Salary for work performed in Ukraine is taxed there at 18% income tax plus a 5% military levy, and the employer pays a unified social contribution of 22%, up to a ceiling of 20 minimum wages (172,940 hryvnia a month in 2026). A director working from Israel raises a different question: whether the Ukrainian company is managed from Israel and treated as resident in Israel.
| Scenario | In Ukraine | In Israel | Point to check |
|---|---|---|---|
| An Israeli company holds 100% and receives a dividend | 18% corporate tax, then 5% withholding under the treaty | 23% on the dividend, less a credit | Certificate of residence, beneficial owner, currency restrictions |
| An Israeli individual holds 100% and receives a dividend | 18% corporate tax, 5% tax on the dividend and 5% military levy | 30% for a substantial shareholder, less a credit | A credit for the military levy is not certain |
| An Israeli director receives a salary for work in Ukraine | 18% income tax, 5% levy, 22% on the employer | Employment income from abroad, with a credit | Work permit, social security |
| A director works from Israel and receives management fees | Possible withholding, depending on how the payment is classified | Income in Israel | Risk of management and control from Israel |
When might an Israeli company create a permanent establishment in Ukraine?
An Israeli company creates a permanent establishment in Ukraine when it has a fixed place of business there through which activity is carried on, under the Ukrainian Tax Code. PwC Tax Summaries notes several tests worth knowing:
- An office or place of management in Ukraine, and also a server.
- Services: services provided by the company's employees in Ukraine on a single project for more than 183 days in a 12-month period.
- Building site: a construction project lasting more than 12 months.
- Dependent agent: a representative who acts only for the company and binds it. An independent agent acting for several clients in the ordinary course of business does not create a permanent establishment.
- Auxiliary and preparatory activity does not create a permanent establishment, but according to PwC the tax authorities tend to interpret business activity broadly.
A foreign company operating through a permanent establishment must register as a corporate taxpayer in Ukraine. The treaty with Israel may set different tests, so both sources are checked.
Which other rules affect a foreign-owned company?
Mainly transfer pricing, a limit on interest deductions for debt financing, and a longer audit period for related-party transactions, according to PwC Tax Summaries (as of 2026).
- Transfer pricing: transactions with a foreign related party are controlled when they exceed 10 million hryvnia a year with one party, in a company whose annual income exceeds 150 million hryvnia.
- Debt financing: when debts to foreign parties exceed 3.5 times equity, the interest deduction is limited to 30% of an extended profit base.
- Limitation: the tax authority may generally audit 1,095 days back, and 2,555 days for related-party transactions and withholding on non-residents. Martial law suspends the running of the tax limitation period.
- Tax audits: resumed on 8 December 2023, with relief for businesses in combat zones and occupied territories.
Who should be involved in building the structure?
An accountant and a lawyer in Ukraine and a tax adviser in Israel, who together build a holding, financing and distribution structure that fits the tax rules and the currency restrictions; we coordinate between them. The figures in this guide are correct as of November 2026 and are based on the sources listed below; National Bank restrictions change frequently and should be checked before every transfer.
What should be done before distributing profits?
Before every distribution, check that the profit belongs to a period for which a dividend may be transferred, how much of the National Bank's monthly limit remains, and that there is an Israeli certificate of residence for the treaty rate.
- Make sure the profit belongs to a period for which a dividend may be transferred (2023 onwards) and that the financial statements are approved.
- Check with the Ukrainian bank the remaining monthly limit and the additional routes the company is entitled to.
- Obtain an up-to-date certificate of Israeli tax residence for the shareholder and give it to the Ukrainian company before payment.
- Calculate the withholding under the treaty, and pay it in Ukraine on time.
- Document in Israel the tax paid in Ukraine for the credit, and report it in the annual return.
The information here is general and is not tax advice, and every case requires individual review.
More on doing business in Ukraine: Setting up a company in Ukraine · An Israeli company operating in Ukraine · Commercial disputes and litigation in Ukraine · Comparison of 8 countries · All guides for companies and businesses
Frequently asked questions
What is the corporate tax rate in Ukraine in 2026?
As of November 2026, according to PwC Tax Summaries: The general rate is 18% of taxable profit. Financial institutions pay 25% and banks 50%. A small company meeting the conditions can choose simplified tax of 3% or 5% of income.
How much tax is withheld on a dividend from Ukraine to an Israeli company?
As of November 2026: Under Ukrainian law 15%. Under the tax treaty between Israel and Ukraine, the rate falls to 5% when the Israeli company holds at least 25% of the capital and presents a certificate of residence, and otherwise it is 15%.
Is there a tax treaty between Israel and Ukraine?
Yes. The treaty was signed in Jerusalem on 26 November 2003. It limits withholding tax on dividends (5% or 15%), interest (5% or 10%) and royalties (10%), and provides that Israel gives a credit for the Ukrainian tax.
Can a dividend be transferred from Ukraine to Israel during the war?
Yes, subject to National Bank restrictions. As of November 2026 dividends accrued from 1 January 2023 may be transferred, up to one million euros a month, and there are further routes for capital and loans injected from abroad. The rules change, so check with the bank before every distribution.
How much tax is paid in Israel on a dividend from a Ukrainian company?
As of 2026, an individual pays 25%, or 30% for a substantial shareholder, and on high income also Israeli surtax. Israel gives a credit for the income tax paid in Ukraine, up to the amount of Israeli tax on the same income. As for the Ukrainian military levy, the credit is not certain.
Can a Ukrainian subsidiary of an Israeli company pay simplified tax?
Usually not. A company in which legal entities that are not simplified taxpayers hold 25% or more of the capital cannot be in group 3, and will therefore pay corporate tax of 18%.
When does an Israeli employee in Ukraine create a permanent establishment?
It may. Under the Ukrainian Tax Code, services on a single project for more than 183 days in 12 months, a permanent office or an agent who binds the company create a permanent establishment. The treaty with Israel may set different tests, so both are checked.
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- PwC Worldwide Tax Summaries - Ukraine, Corporate: Taxes on corporate income (checked 30.6.2026)
- PwC Worldwide Tax Summaries - Ukraine, Corporate: Withholding taxes (including treaty rates with Israel)
- PwC Worldwide Tax Summaries - Ukraine, Corporate: Other taxes (VAT, USC)
- PwC Worldwide Tax Summaries - Ukraine, Corporate: Corporate residence (PE)
- PwC Worldwide Tax Summaries - Ukraine, Corporate: Group taxation (TP, thin cap)
- PwC Worldwide Tax Summaries - Ukraine, Individual: Significant developments (military levy)
- UN Treaty Series - Convention between Israel and Ukraine on taxes on income and on capital, Jerusalem, 26 November 2003
- KPMG Ukraine - NBU relaxes currency restrictions (8/2025)
- Government of Canada Trade Commissioner Service - Ukraine: banking, finance and taxation (6/2026)
- APPU - Валютна лібералізація з 11 серпня 2026 (Постанова НБУ № 90 від 10.08.2026)
- PwC Worldwide Tax Summaries - Israel, Corporate: Income determination (checked 29.6.2026)
- Israel Tax Authority - Form 150, declaration of a holding in a foreign resident body of persons
