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Controlled foreign company, reporting

In 2020, Ukraine joined to the list of countries whose residents report on their own controlled foreign companies. 
 
The first reporting period was 2022, when everyone could submit their own report on a controlled foreign company until 1 May 2023, and starting in 2024, all owners of foreign companies are already required to submit their reports for 2022 and 2023.
 
In 2023, Misechko & Partners Law Firm prepared and filed 19 reports on controlled foreign companies for 2022, including companies from the United States, the United Kingdom, Cyprus, Estonia, Poland, the BVI, Slovakia, Latvia and Canada.
 
On the procedure for submitting CFC reports
The report on a controlled foreign company is submitted by controlled persons together with their own declaration of property and income of individuals, Annex CFC to the declaration and the foreign company's reports translated into Ukrainian (if the reports are prepared in English, their translation is not required) by 01 May each year at the main place of registration of a resident individual by electronic means of electronic communication in electronic form with an electronic digital signature through a personal tax office.
 
The report on controlled foreign companies can be full or abbreviated.
 
A full report on controlled foreign companies is submitted if, as of the date of preparation of the report, the controlled foreign company's financial statements are available, otherwise an abbreviated report on controlled foreign companies is submitted.
 
In case of submission of an abbreviated report on controlled foreign companies, the controlled person is obliged to submit a full report by 31 December of the year following the reporting year.
 
List of required information
The following documents and information are required to prepare the reports:
 
  1. By controlled person:
    1. Internal passport with the place of registration;
    2. Identification code;
    3. Information about:
      1. the amount of salary and withheld taxes for 2023,
      2. the amount of income under civil law contracts for 2023,
      3. the amount of dividends received for 2023,
      4. the amount of income from the sale of movable or immovable property for 2023,
      5. the amount of investment income for 2023,
      6. the amount of foreign income for 2023,
      7. the amount of income of a sole proprietor, if not on a single tax for 2023,
      8. the amount of income of a sole proprietor if on a single tax for 2023,
      9. a list of movable and immovable property,
      10. Ukrainian bank account (in case of refund of overpaid funds).
 
  1. On a controlled foreign company:
    1. A certificate (extract, extract) from the company register, including information on the company's name, address, registration number, shareholders and directors,
    2. A share certificate or other document confirming the current shareholder structure of the company;
    3. Trust declaration, nominee service agreement (in case of indirect control over a foreign company);
    4. The company's tax number;
    5. The company's annual reports for 2022 and 2023;
    6. In case the total income of the controlling person from all CFCs exceeds the equivalent of EUR 2 million at the end of the reporting period 2023, information on
      1. The list of transactions of a controlled foreign company with non-residents registered in the states (territories) included in the list of states (territories) approved by the Resolution of the Cabinet of Ministers of Ukraine in accordance with subparagraph 39.2.1.2 of subparagraph 39.2.1 of paragraph 39.2 of Article 39 of Section I of the Tax Code of Ukraine is available at https://zakon.rada.gov.ua/laws/show/1045-2017-%D0%BF#n10;    
      2. List of transactions of a controlled foreign company with non-residents - related parties;
      3. The list of transactions of a controlled foreign company with non-residents whose legal form is included in the list approved by the Resolution of the Cabinet of Ministers of Ukraine in accordance with subparagraph "d" of subparagraph 39.2.1.1 of paragraph 39.2.1 of Article 39.2 of Section I of the Tax Code of Ukraine is available at https://zakon.rada.gov.ua/laws/show/480-2017-%D0%BF#n8.    
 
Cost of legal services
The cost of our legal services for the preparation and submission of a report on a controlled foreign company starts from EUR 900 and includes:
  • analysis of the structure of a controlled foreign company;
  • Preparation of a declaration of property and income of individuals;
  • Preparation of the CFC Annex to the declaration;
  • preparation of a full report on a controlled foreign company for 2022 and 2023.
In case the controlled person has already submitted the 2022 reports to the CFC, or if the company was only established in 2023, the cost of our services will start from EUR 600.00.
 
If, as of the date of preparation and submission of the reports by the CFC, the controlled foreign company's 2023 reports are not yet ready, the cost of our services for preparing an abbreviated report will be an additional EUR 200.00.
 
Translation into Ukrainian and certification of the accounts of a controlled foreign company is paid separately.
 
Liability for failure to submit a report on controlled foreign companies
Failure of a controlling person to submit a report on controlled foreign companies - a fine in the amount of 100 times the minimum subsistence level for an able-bodied person established by law as of 1 January of the tax (reporting) year (UAH 302,300.00 as of 1 January 2024).
 
Late submission by a controlling person of a report on controlled foreign companies - a fine in the amount of one subsistence minimum for an able-bodied person established by law as of 1 January of the tax (reporting) year for each calendar day of non-submission, but not more than 50 subsistence minimums for an able-bodied person established by law as of 1 January of the tax (reporting) year (UAH 3,023.00 per day, but not more than UAH 151,150.00).
 
Failure of a controlling person to disclose information on existing controlled foreign companies in the report on controlled foreign companies and/or incomplete disclosure of information on existing controlled foreign companies - a fine of 3 per cent of the amount of income of controlled foreign companies or 25 per cent of the adjusted profit of a controlled foreign company for the relevant year not disclosed in the report on controlled foreign companies, whichever is higher, but not more than 1000 times the minimum subsistence level.
 
Our contacts: [email protected], +38050 388 39 20.