Filing a notification on controlled foreign companies (CFCs)

Since January 1, 2022, Ukraine has had rules on controlled foreign companies (CFCs) in effect. They establish an obligation for controlling persons, individuals and legal entities who are residents of Ukraine, to submit notifications to the tax authorities regarding the acquisition or cessation of control over foreign companies in cases provided for by the Tax Code of Ukraine.

If you have acquired a share in a foreign company, begun exercising actual control over it, or ceased such control, it is important to determine in a timely manner whether an obligation to submit a CFC notification has arisen and to meet the established deadline.

When is it necessary to submit a CFC notification?

Under current legislation, submitting a CFC notification is mandatory in the following cases:

• Creation/establishment of a foreign company, in cases where such an event gives rise to the corresponding obligation;

• Acquisition of a share/corporate rights in a foreign company or the commencement of actual control over it;

• Disposal of a share/corporate rights in a foreign company or cessation of actual control;

• Liquidation of a foreign company in cases provided for by legislation.

A notification is submitted separately for each relevant event or CFC.

Who must submit a CFC notification?

CFC notifications are submitted by controlling persons, individuals and legal entities who are residents of Ukraine and meet the criteria for control over a foreign company. The obligation to submit arises in cases provided for by the Tax Code of Ukraine.

A CFC notification must be submitted within 60 calendar days from the date of acquiring a share in a foreign company, commencing actual control, disposing of a share, or ceasing actual control, depending on the grounds for submitting the notification.

The notification is submitted to the tax authority at the controlling person's main place of registration.

If you are unsure whether you have the status of a controlling person or whether you are required to submit a notification, we recommend that you first seek advice regarding the KIK.

What is needed to submit a CFC notification?

To prepare the notification, it is necessary to provide information about the controlling person and the foreign company, as well as documents confirming the relevant event.

Depending on the situation, the following may be required:

1. registration data of the foreign company;

2. information on the ownership structure;

3. the size of the share and the date of its acquisition or disposal;

4. documents confirming the purchase or sale of the share;

5. information regarding the commencement or cessation of actual control;

6. documents on the liquidation of the company, if the notification is related to the termination of its activity.

What penalties apply for failing to submit a CFC notification?

Failure by a controlling person to submit a notification regarding the acquisition of a share in a foreign legal entity, the commencement of actual control, the disposal of a share, or the cessation of actual control entails a fine of 300 subsistence minimums for an able-bodied person, as established by law as of January 1 of the relevant tax (reporting) year, for each such fact.

The amount of the fine is determined according to the subsistence minimum established for the relevant year.

How to submit a CFC notification?

A CFC notification is submitted to the tax authority in electronic form via electronic communication means.

Before submission, it is necessary to determine the grounds for the notification, the date the relevant circumstance arose or ceased, and to verify the information about the controlling person and the foreign company.

The submission procedure includes:

• determining whether an obligation to submit a notification has arisen;

• determining the grounds and deadline for submission;

• preparing the necessary data and documents;

• completing and submitting the notification to the State Tax Service;

• obtaining confirmation of submission.

Maira Consult's assistance in submitting a CFC notification

Maira Consult helps controlling persons determine their obligation to submit a CFC notification, prepare the necessary documents, and submit the notification to the tax authority of Ukraine.

We help:

• analyze the ownership structure of the foreign company;

• determine whether a person has the status of a controlling person;

• determine the grounds and deadline for submitting the notification;

• prepare the CFC notification;

• verify the data and documents;

• submit the notification to the State Tax Service;

• provide assistance if it becomes necessary to correct the submitted information.

If you have acquired or sold a share in a foreign company, created a CFC, or begun or ceased actual control over it, contact Maira Consult for an assessment of your obligation to submit a notification.

CFC notification and CFC report, what is the difference?