From 1 January 2022, the Tax Code of Ukraine introduced the concept of controlled foreign companies (CFCs). This means that individuals and legal entities - residents of Ukraine - who own shares in foreign companies or exercise actual control over them are obliged to notify the tax authorities of the acquisition or loss of control over such companies.
When is it necessary to file a CFC notification?
According to the current legislation, filing a CFC notification is mandatory in the following cases:
- Establishment/establishment of a foreign company.
- Acquisition of corporate rights/shares in a foreign company or the beginning of actual control over a CFC.
- Alienation/sale of corporate rights/shares of a foreign company.
- Liquidation of a foreign company.
CFC owners (individuals and legal entities - residents of Ukraine) must submit a notification within 60 calendar days from the date of acquisition or termination of control over a foreign company. The document is submitted to the tax authority at the main place of registration of the individual or legal entity.
In simple terms, if you acquired a share in a foreign company or registered a new company, you must send a notification of such acquisition. If you have sold your share in a foreign company or liquidated the company, you must send a notification of loss of control to the Ukrainian tax authorities. If you have registered several foreign companies during a calendar year and sold some shares in them to other persons, you must submit a notification on the acquisition or loss of control for each of the foreign companies separately.
If you are the owner of a CFC, you must notify the tax authorities in the following cases:
- Acquisition of a share in a foreign company or establishment of a new company.
- Sale of a share in a foreign company or liquidation of a company.
- If several foreign companies were registered during the year or a share in them was alienated, a separate notification must be submitted for each case.
It is worth noting that the obligation to file a CFC notification arose only for events after 1 January 2022.
What are the penalties for failure to report a CFC?
Failure to submit a notification on the acquisition or loss of control over a CFC within the established period (60 days) is punishable by a fine of 300 minimum living wages for able-bodied persons. As of 1 January 2025, this amounts to UAH 908,400.
In order to avoid penalties, we advise foreign company owners to check whether they have an obligation to submit such a notification.
How can Maira Consult help CFC owners?
The issue of CFC control is quite complex and requires professional analysis. Our experts will help you:
- Analyse the CFC structure and assess potential tax risks.
- Identify transactions subject to CFC notification.
- Evaluate the feasibility of liquidating a CFC, taking into account the tax implications.
- Identify controlling persons of the CFC in accordance with the tax legislation of Ukraine.
If you have any questions regarding the correct submission of a CFC notification, please contact Maira Consult! We have extensive experience and successful cases of filing such notifications with the Ukrainian tax authorities.
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Don't risk getting penalties! Get professional advice and assistance on CFC issues from Maira Consult experts. Write to us or leave a request on the website - we will help you avoid troubles with the tax authorities!
