Every day, we receive questions about CFC reporting from clients. Some have only recently learned about CFCs, while others are certain that they do not need to file CFC reports.
In light of this, we would like to share information on this matter, draw foreign company owners’ attention to the existing legal requirements concerning CFCs, and help them avoid potential fines in the future.
We would like to remind you that since 1 January 2024, all tax residents of Ukraine (individuals and legal entities) who exercise influence and control over foreign companies (own foreign companies) should have paid attention to this matter and submitted the relevant reports on all controlled foreign companies (CFCs) they own to the Ukrainian tax authorities.
What is a CFC?
A controlled foreign company (hereinafter, a CFC) is any legal entity registered in a foreign state or territory that is deemed to be under the control of an individual resident of Ukraine or a legal entity resident in Ukraine, in accordance with the rules established by the Tax Code.
Simply put, if a Ukrainian resident owns an interest in a foreign company, they are obliged to ensure that the company’s financial statements are prepared and to submit the relevant report to the State Tax Service of Ukraine.
Is it mandatory to declare a CFC? What happens if I do not submit CFC reporting?
Yes, all residents of Ukraine are required to declare that they have a CFC and submit the relevant reports, although exceptions apply depending on the size of the interest a person holds in a foreign company. Failure to submit CFC reports is subject to substantial fines under the law.
For example, the main fines for failure to submit CFC reports are:
Failure by a controlling person to submit a CFC report, a fine equal to 100 times the subsistence minimum for an able-bodied person established by law as of 1 January of the relevant tax (reporting) year (302 800.00 hryvnias as of 1 January 2025).
Late submission by a controlling person of a CFC report, a fine equal to one subsistence minimum for an able-bodied person established by law as of 1 January of the relevant tax (reporting) year for each calendar day of non-submission, but no more than 50 subsistence minimums for an able-bodied person established by law as of 1 January of the relevant tax (reporting) year (3 028.00 hryvnias per day, but no more than 151 400.00 hryvnias).
When must CFC reporting be submitted?
In 2025, a report on a controlled foreign company for 2024 must be submitted.
The deadline for individuals to submit a CFC report is 30 April 2025, simultaneously with the submission of the annual declaration on the property and income of individuals.
How does the tax authority find out that I have a CFC?
Information about the beneficial owner of a foreign company can be found online, as many countries have open company registers. The tax authorities of many European countries, such as Poland, Estonia, Cyprus, the United Kingdom and others, may exchange information upon receiving a request from the Ukrainian tax authority.
As a rule, the owner of a foreign company has open bank accounts, and if countries exchange information, our tax authority may obtain such information.
Is it worth it to expose yourself to substantial administrative fines if you can submit CFC reporting and eliminate risks for yourself and your business?
Do I have to pay taxes on my CFC?
Current legislation provides for such an obligation, but there are exceptions that exclude it.
Under the general rules, a controlling person has the following obligations:
to pay personal income tax at a rate of 18%
and a military levy at a rate of 5% of the undistributed profit of the CFC for the reporting period.
In other words, if, according to the CFC’s financial statements, the CFC made a profit in the reporting year that was not distributed among its owners, the owners become liable to pay taxes on the amount of the CFC’s undistributed profit.
However, current legislation also provides for cases in which a person is exempt from paying these taxes, namely:
the total aggregate income of all CFCs of one controlling person from all sources, according to the financial statements, does not exceed the equivalent of 2 million euros at the end of the reporting period;
the CFC is a public company whose shares (interests) are traded on a recognized stock exchange;
the CFC is an organization that, under the laws of the relevant foreign jurisdiction, carries out charitable activities and does not distribute income to its founders (members);
the share of passive income of the CFC does not exceed 50 percent of the total income of the controlled foreign company from all sources;
the CFC actually pays corporate income tax at an effective rate that is no lower than the basic (standard) corporate income tax rate in Ukraine, or is lower than that rate by no more than five percentage points (that is, the corporate tax rate is at least 13%).
Can I submit CFC reporting myself?
Yes, of course. In your taxpayer account, you can find the form for submitting tax reports and file the CFC report yourself. You can find a great deal of useful information about this on YouTube and online.
However, we would like to draw your attention to the fact that, according to the State Tax Service of Ukraine, only 405 CFC reports in abbreviated form and 495 CFC reports in full form were submitted in 2023. You can find the statistics for 2023 in our article, CFC Reporting in 2025: Key Aspects of Filing Reports for 2024 and Controllers’ Liability.
We have extensive experience in filing CFC reports, so we recommend contacting Maira Consult, as our lawyers have already handled the preparation and submission of CFC reports and gained positive experience.
DO I have to submit a CFC report if I have an inactive company (or an offshore company that does not file reports and does not operate)?
Yes, every CFC owner must submit CFC reports, even if the company has not conducted any activity and has not filed reports in its country of incorporation. In this case, financial statements must be prepared in accordance with international standards and the relevant CFC reports must be submitted in Ukraine.
Are CFC notifications and CFC reporting one and the same?
No. A CFC notification is a notification to the tax authorities regarding the acquisition (commencement of actual control) or disposal of an interest (termination of actual control) by a Ukrainian resident in a foreign legal entity, or of property rights to an interest in the assets, income or profit of an entity without legal personality.
Put simply, if you established a company abroad or ceased to be a shareholder of a foreign company on or after 1 January 2022, you must submit such a notification to the State Tax Service of Ukraine within 60 days. In other words, every time you register a foreign company or acquire an interest in a foreign company, dispose of an interest in a foreign company, or liquidate such a company altogether, you are required to notify the Ukrainian tax authorities.
As of today, many Ukrainians live abroad and have registered foreign companies through foreign providers, registrars or local lawyers. Unfortunately, most owners were not informed by the local lawyers who assisted with registering the foreign company that CFC notifications had to be submitted, and did not submit CFC notifications to the Ukrainian tax authorities within the prescribed time limits.
Can you help me submit CFC reports?
Yes, of course. Our specialists have positive experience in preparing and submitting CFC reports to the Ukrainian tax authorities and can provide the following services:
Analysis of the structure of your foreign companies
Determining the owners’ CFC reporting obligations.
Determining the reporting periods for each CFC.
Preparation of the annual declaration on property and income.
Assistance with submitting CFC reports.
As a result, you will receive confirmation from the tax service that the CFC report was accepted without errors and will duly fulfill your obligations to prepare and submit CFC reports.
