To the attention of controllers of controlled foreign companies - individuals!

State Tax Service of Ukraine informs that campaign for submission of Reports on controlled foreign companies for reporting periods 2022 and 2023 by controlling persons – individuals is currently ongoing.

1116 Reports on controlled foreign companies and 509 Reports in the abbreviated form were received during 2023.

For tax control purposes over income taxation of controlled foreign company, reporting (tax) period is a calendar year or another reporting period of controlled foreign companies that ends within the calendar year.

First reporting (tax) year is 2022 (if reporting year does not correspond to the calendar year – reporting period starting in 2022).

It should be reminded you that Report on controlled foreign companies must be submitted by the controlling persons at the same time as submitting annual property and income declaration.

Sub-paragraph 49.18.4 Paragraph 49.18 Article 49 of the Tax Code of Ukraine (hereinafter – Code) stipulates that property and income declarations are submitted for the calendar year by May 1 of year following reporting year.

At the same time, Paragraph 54 Sub-section 10 Section XX "Transitional Provisions" of the Code establishes the following peculiarities for application of taxation provisions of controlled foreign companies’ income during transitional period: first reporting (tax) year for Report is 2022 (if reporting year does not correspond to the calendar year – reporting period starting in 2022). Controlling persons have a right to submit Report for 2022 to the controlling body at the same time as submitting annual property and income declaration or corporate income tax declaration for 2023 with inclusion of adjusted income specified in such report on controlled foreign companies subject to taxation in Ukraine to the indicators of the corresponding declarations for 2023. At the same time, fines and/or financial sanctions are not applied.

Duly certified copies of controlled foreign companies’ financial reporting confirming amount of its income for reporting (tax) year must be attached to Report on controlled foreign companies.

Sub-paragraph 39².5.2 Paragraph 39².5 Article 392 of the Code stipulates that if deadlines for preparing financial reporting in relevant foreign jurisdiction are later than deadlines for submitting annual property and income declaration or corporate income tax declaration, such copies of financial reporting of controlled foreign company are submitted together with annual property and income declaration or corporate income tax declaration for the next reporting (tax) period.

Herewith, Report on controlled foreign companies contains all necessary information based on results of its activities in relevant reporting period (according to accounting data and/or interim financial reporting).

Also, if such person does not have opportunity to ensure preparation of financial reporting of controlled foreign companies and/or calculation of adjusted income of controlled foreign companies before deadline for submitting annual property and income declaration or corporate income tax declaration such person submits report on controlled foreign companies in the abbreviated form, which contains only information provided by Sub-paragraphs "a" - "c" of Sub-paragraph 39².5.2 Paragraph 39².5 Article 392 of the Code.

In case of submission of Report on controlled foreign companies in the abbreviated form, the controlling person is obliged to submit full Report on controlled foreign companies by the end of calendar year following reporting (tax) year.

It must be remembered that Report on controlled foreign companies is submitted for each controlled foreign company separately and exclusively in the electronic form.

At the same time, Paragraph 120.7 Article 120 of the Code establishes financial responsibility for tax violation, in particular:

failure to submit Report on controlled foreign companies entails imposition of a fine in the amount of 100 amounts of subsistence minimum for an able-bodied individual on January 1 of tax period (302 800 UAH in 2024);

untimely submission by the controlling person of Report on controlled foreign companies entails imposition of a fine in the amount of one amount of subsistence minimum for able-bodied individual established by the law on January 1 of tax year for each calendar day of non-submission, but no more than 50 amounts of subsistence minimum for able-bodied individual established by the law on January 1 of tax year (up to 151 400 UAH in 2024).

At the same time, Sub-paragraph 54 Sub-section 10 Section XX of the Code establishes that:

fines and financial sanctions for violating requirements of Article 39² of the Code determining and calculating income of controlled foreign companies are not applied for results of reporting (tax) years2022-2023;

according to results of reporting (tax) years2022-2023, administrative and criminal liability for any violations related to the application of provisions of Article  39² of the Code are not be applied to the taxpayer and his/her officials.