Founder in Germany: Dividend, Salary, Director's Fee or Management Fee from a Ukrainian Company?

A common post-relocation question is:

Should I take money from the Ukrainian company as a dividend, salary or management fee?

That framing is incomplete. A fourth category often matters: remuneration received specifically in a corporate board or director capacity.

The correct sequence is therefore not “compare tax rates first”. It is:

identify the legal role → classify the payment → apply domestic law → apply the current treaty → test payroll/social-security and company-side consequences → check execution and evidence.

Broader post-relocation architecture: GU-01 — Founder in Germany, Ukrainian Company Still Operating · Dividend deep dive: GU-02

A dividend is a shareholder return, not remuneration for work

For an ordinary Ukrainian corporate-income-tax payer, current Ukrainian tax guidance confirms a 5% personal income-tax rate on dividends paid to a non-resident individual. Dividends are also currently subject to the 5% military levy. State Tax Service — dividend PIT · military levy

Under the currently applicable Germany–Ukraine treaty, Article 10 allows Ukraine to tax the dividend but caps the general source-state rate at 10% where the beneficial owner is not within the qualifying corporate 5% category. A lower domestic Ukrainian rate is not increased merely because the treaty permits a higher ceiling.

In Germany, dividends held as private investment income generally fall within §20 EStG and the §32d framework, subject to the substantial-shareholder rules and foreign-tax-credit mechanics. The Ukrainian military levy should not automatically be assumed to produce the same German credit treatment as treaty-covered Ukrainian income tax.

A dividend therefore belongs to the ownership relationship. It should not be used to disguise recurring remuneration for services that the founder actually performs.

Detailed dividend analysis: GU-02 — Dividends from a Ukrainian Company to a Founder in Germany

Salary follows the employment relationship and the place where the work is exercised

German domestic law treats salaries, wages, bonuses and similar remuneration for employment as income from non-self-employed work under §19 EStG.

The current 1995 Germany–Ukraine treaty uses the physical exercise of employment as the core rule in Article 15: employment income of a German resident is taxable only in Germany unless the employment is exercised in Ukraine. If work is exercised in Ukraine, Ukraine may tax that portion under the treaty. Current Germany–Ukraine treaty — BMF

The 183-day exception is not a universal shield. All of its conditions must be met. In a typical case where the employer itself is the Ukrainian company, the condition requiring the employer not to be resident in the work state may fail for Ukrainian workdays.

Ukrainian domestic guidance states that Ukraine-source salary paid to a non-resident individual is generally subject to 18% PIT and 5% military levy. State Tax Service — non-resident salary The domestic withholding position and the final treaty allocation must therefore be analysed separately.

German payroll mechanics are a separate question

German tax liability does not depend on whether German wage tax was actually withheld. Under §38 EStG, wage-tax withholding duties depend on whether the employer qualifies as an inländischer Arbeitgeber or another statutory withholding case applies. A foreign company without the relevant German nexus may therefore create different payroll mechanics from a German employer — without removing the employee’s German income-tax exposure.

Do not assume that every payment to a founder-director is ordinary salary

The current treaty contains a separate rule in Article 16 for directors’ fees and similar payments received by a resident of one state in the capacity of a member of the board of directors of a company resident in the other state. Such remuneration may be taxed in the company’s state of residence. Article 16 — current treaty

For a German-resident founder receiving qualifying Article 16 remuneration from a Ukrainian-resident company, Ukraine may therefore have a treaty taxing right even if much of the founder’s activity occurs from Germany. Germany remains the residence state and the current treaty’s Article 23 places directors’ fees in the German foreign-tax-credit branch. Article 23 — current treaty

But the treaty category must be tested against the founder’s actual corporate capacity. For a Ukrainian TOV, the existence of a statutory or executive “director” title does not by itself establish that Article 16 applies. The corporate-law capacity and its fit with the treaty’s board-of-directors concept must be tested specifically.

The label “director fee” should therefore not automatically be applied to every CEO, manager, shareholder or service-provider payment without checking the corporate-law role and the treaty wording.

The Ukrainian domestic rate and withholding mechanics then depend on how that remuneration is legally characterised under Ukrainian law. The treaty allocates taxing rights; it does not create a domestic payroll category by itself.

If the founder's role also includes actual management of the Ukrainian company from Germany, review the separate FM-02 — German Geschäftsleitung analysis.

A management fee works only where there is a genuinely independent service relationship

If the founder provides services personally as an independent consultant or professional, the current treaty’s Article 14 can become relevant. Under that article, independent personal-service income of a German resident is generally taxable only in Germany unless the individual has a fixed base in Ukraine for performing the activity. Article 14 — current treaty

That result is fundamentally different from Article 15 employment income and Article 16 directors’ fees. The first task is therefore to decide which legal relationship actually exists.

Ukrainian guidance confirms an 18% PIT rate for Ukraine-source remuneration paid to a non-resident individual under a civil-law contract. State Tax Service — non-resident civil-law remuneration Where the current treaty allocates the relevant independent-service income exclusively to Germany, treaty-relief mechanics must be analysed rather than treating the Ukrainian domestic rate as the final answer.

German status cannot be created by invoice wording

For German social-security purposes, §7 SGB IV treats instruction-bound work and integration into another party’s organisation as indicators of employment. Under §7a SGB IV, the parties can seek a formal status determination from Deutsche Rentenversicherung Bund.

If the founder works almost exclusively for the Ukrainian company, performs the same executive role as before relocation and remains integrated into its organisation, a “management fee” label does not itself establish independent status.

VAT/place-of-supply analysis is separate from the income-tax and treaty classification. A service can be treated one way for income-tax purposes and still require a separate German/Ukrainian VAT place-of-supply and reverse-charge analysis.

Company-to-company management or service fees belong to a different analysis: GU-03 — German GmbH + Ukrainian OpCo.

The founder's tax is only half of the analysis

Each payment route also has a different company-side logic.

• Dividend: a distribution from corporate profit; it is not remuneration for services and should follow Ukrainian corporate-distribution rules.
• Salary: employment expense and payroll relationship; role, payroll documentation, employer obligations and the actual place of work matter.
• Director's fee: must correspond to the relevant corporate appointment and remuneration basis.
• Management/service fee: requires a real service, contractual scope, evidence of performance and a defensible pricing basis.

Where the founder or a related German entity charges the Ukrainian company, related-party and transfer-pricing questions may arise independently from the founder’s personal tax. The payment should not be designed from the personal tax rate backwards.

Review the founder's role before choosing the payment route

Step 1 — Identify every role. Shareholder? Employee? Statutory director? Board member? Independent adviser?

Step 2 — Separate the functions. What work is actually performed, for which entity, and where?

Step 3 — Classify each payment. Ownership return, employment income, directors’ remuneration or independent-service income.

Step 4 — Apply domestic law first. Germany and Ukraine may classify and withhold differently.

Step 5 — Apply the current treaty. Article 10, 14, 15 or 16 may lead to different taxing-right allocations.

Step 6 — Add payroll and social security. Especially for work physically performed in Germany.

Step 7 — Test company deductibility / TP / governance. Particularly for salary and fees paid to a shareholder or related person.

Step 8 — Check FX and banking execution. The legal right to pay and the ability to move funds are separate.

Step 9 — Build one evidence file. Contracts, corporate resolutions, work records, invoices, tax certificates and banking documents should tell the same story.

The signed 2026 treaty is not yet the operative treaty

Germany and Ukraine signed a replacement double-tax treaty on 19 May 2026. As of 2 October 2026, the BMF states that it still requires ratification before entry into force. BMF treaty status

The signed treaty changes the numbering and structure of the remuneration articles: employment appears in Article 14 and directors’ fees in Article 15. The change is not only a renumbering exercise. The signed 2026 treaty no longer contains the current standalone Independent Personal Services article. A genuinely independent founder-service arrangement would therefore need to be re-analysed under the new treaty architecture, including Article 7 / permanent-establishment rules where applicable, once the new treaty becomes effective. It should not be applied to current payments until it becomes effective for the relevant period. Signed 2026 treaty — BMF

Founder remuneration after moving to Germany

Receiving money from a Ukrainian company while living in Germany?

Map the founder’s roles first — shareholder, employee, director and independent adviser — then align each payment with the correct domestic, treaty, payroll, social-security and evidence framework.