“We simply attended a trade fair, signed a stand installation contract in London – and our accountant said: withhold 15%.”
For Ukrainian furniture manufacturers, exporting is no longer an exception – it is the norm. With HS94 furniture exports reaching $1.04 billion in 2025, the figures speak for themselves. Site measurements in Poland, installations in Germany, trade fairs in the United Kingdom, design projects for clients in the United States – international activity has become routine.
However, with new markets come new tax risks. And those risks can erode margins faster than logistics costs or warranty claims.
Let us look at the key risk areas – and explain why accountants or bank compliance departments sometimes take a cautious (or overly cautious) approach when you are implementing your export strategy.
Withholding tax on payments to non-residents – when does 15% apply?
Article 141.4 of the Tax Code of Ukraine sets out the general rule.
Where a Ukrainian company pays income to a foreign partner (a non-resident), a 15% withholding tax (often referred to as repatriation tax) may apply if the income is considered to arise from a Ukrainian source.
The Tax Code specifies the types of income potentially subject to this 15% withholding, including:
- Passive income: royalties, interest, dividends
- Freight
- Engineering services (as defined in the Code)
- Commission for intermediary activities carried out in Ukraine
Particular attention should be paid to services that could be reclassified as engineering, especially where contracts use wording such as:
- engineering services
- technical consulting
- design engineering
- project supervision
If income is linked to activities performed in Ukraine, to assets used in Ukraine, or to services rendered in Ukraine, it may be treated as Ukrainian-source income.
Double Tax Treaties – how the rate may be reduced (or eliminated)
Article 103 of the Tax Code regulates the application of international tax treaties.
For transactions involving the UK, the US or EU Member States, the Ukrainian payer must obtain:
- A Certificate of Tax Residence issued by the relevant foreign tax authority
- Confirmation of beneficial ownership status
Without these documents, reduced treaty rates cannot be applied.
Key documents typically required
Certificate of Tax Residence
- Issued by the foreign tax authority
- Valid for the relevant tax year
- Confirming treaty residence status
In the UK – issued by HM Revenue & Customs (HMRC)
In the US – Form 6166 issued by the Internal Revenue Service (IRS)
In EU countries – issued by the respective national tax authority
Additional requirements may include:
- Apostille or legalisation (where applicable)
- Notarised Ukrainian translation
- A beneficial ownership declaration (where relevant)
If the certificate is not available at the time of payment, the general 15% rate applies, and a refund procedure must be initiated afterwards.
Under Ukrainian law, supporting documents must generally be retained for at least seven years.
Why banks or tax authorities may request documents – even where 15% does not apply
Requests for documents are not always about withholding tax.
They may arise due to:
- AML/KYC requirements – verification of the counterparty’s legitimacy and ownership structure.
- Sanctions screening – confirmation that neither the company nor its beneficial owners are linked to sanctioned jurisdictions, including Russia or Belarus.
- Permanent establishment risk assessment – where activities in Ukraine could create a taxable presence.
- Transfer pricing concerns – but only in the case of controlled transactions (e.g. related parties and threshold levels under Article 39).
It is important to note that banks do not administer transfer pricing rules. Those are reviewed by the tax authorities within a specific legal framework.
Practical guidance for furniture exporters
Participation in trade fairs, stand installation abroad, logistics services or site installations outside Ukraine do not, in most cases, automatically create 15% withholding, transfer pricing or additional tax exposure.
However, exporters should:
- Distinguish clearly between withholding tax, transfer pricing, sanctions compliance and AML – these are different legal regimes.
- Conduct basic due diligence on counterparties (registration, sanctions lists, business activity).
- Draft contracts carefully, clearly stating that services are performed outside Ukraine where applicable.
- Avoid collecting unnecessary documentation “just in case”. A Certificate of Tax Residence is required only where a treaty benefit is actually being claimed.
The objective is not to burden the business with excessive internal controls, but to manage real risks proportionately.
Contact us if you have any questions and need professional assistance in export promotion.
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