Payment to a non-resident: why $100,000 can cost a business much more

29.09.2026, 09:20◉ 02 min readEditorial team “SHCHO STALOSIA”

The tax consequences of an international payout should be determined before the payment is approved, not after it. The services are provided, the invoice is received, the CFO approves the payment and $100,000 goes to the non-resident.

Payment to a non-resident: why $100,000 can cost a business much more

In my work with international treaties, I see two opposite positions. The first is "we pay for the services of a foreign company, so there is no tax in Ukraine." The second is "we pay to a non-resident, so we keep 15%".

The fact that the recipient is a foreign company does not determine the taxation procedure. It is necessary to establish what the payment is for and how this income qualifies as Ukrainian legislation.

According to the general rule of subparagraph 141.4.2 of the Tax Code, a rate of 15% is applied to the income of a non-resident with a source of origin from Ukraine in cases specified by law, unless otherwise provided by an international treaty. Therefore, I advise you to start the analysis not with the rate, but with the type of income and its source.

The company transferred $100,000 to a non-resident, and then it turned out that it was necessary to withhold 15%. The price of the error seems to be $15,000, but it is higher.

Details

Therefore, the client's phrase “we have already paid” for a lawyer often means that the best moment for risk management has passed.

Context

I advise you to resolve the issue of taxation of non-resident income at the stage of agreement approval. The reason is simple: before the transfer of funds, the tax risk can be managed, and after the payment, for the most part, it remains only to correct the consequences.

If the tax was not withheld from the income at the time of payment, the Tax Code requires it to be calculated according to a special formula: as if the amount paid was already "clean" after tax. For $100,000 for 15% rates, the calculation is as follows: 100,000 × 100 / (100-15) - 100,000 = 17,647.06. That is, a transaction for $100,000 can cost the company $117,647 and this is without other possible tax consequences.