Advising on CFC exemption from taxation in Ukraine
Tax planning strategies by CFC
Risk assessment in case of tax-free liquidation of a CFC
Risk analysis in case of voluntary declaration (tax amnesty)
CFC REQUIREMENTS IN UKRAINE
entry into force of CFC rules
April 30, 2023
CFC reporting deadline
the amount of the fine for failure to submit a report on the CFC
CFC RULES IN UKRAINE
Controlling persons (individuals and legal entities) are required to submit a report on the CFC, as well as independently include in their taxable income a part of the adjusted profit of the CFC in proportion to their share in the company
WHO CAN BE RECOGNIZED AS A CONTROLLING PERSON?
Owns a share in a foreign legal entity of 50% or more
Owns a share in a foreign legal entity of 25% or more (from 2024 – 10%), if together with other residents the share is more than 50%
Exercises actual control over a foreign legal entity
RESPONSIBILITIES OF CONTROLLING PERSONS
Include CFC profits in your total taxable income April 30230 000 UAH
Submit a CFC report along with a declaration of property status and incomeApril 30230 000 UAH
Pay tax on CFC income at the appropriate rateAugust 25-10% of the tax amount
Notify about the acquisition or alienation of a share in a foreign company (status of a controlling person)Within 60 days from the date of such purchase690 000 UAH
When a controlling person is exempt from paying tax on CFC profits
You pay corporate tax on CFC profits at the effective rate
Your CFC is an active company
Your income from all controlled companies does not exceed 2 million euros
CFC INCOME TAX RATES
Please note that since CFC profits are the basis for personal income tax, they are also subject to military duty at a rate of 1.5%.
18% on retained earnings of a CFC
9% on CFC profit distributed as dividends
5% on CFC profit in the form of dividends from a Ukrainian resident company
WHAT TO DO WITH CFC?
To declare a CFC and pay personal income tax on the company’s profits.
To declare a CFC in Ukraine and not pay tax in Ukraine.
Recognize CFC as a tax resident of Ukraine and become a payer of corporate income tax.
Liquidate the CFC as part of a tax-free liquidation.
File a tax return.
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