According to the legislation, if a tax resident of Ukraine owns a share in the amount of 50% or more in a foreign legal entity; or owns a share in the amount of 10% or more, provided that several individuals or legal entities, residents of Ukraine, own shares in a foreign legal entity, the aggregate size of which equals to 50% or more; or exercises effective control over a foreign legal entity, they are considered the controlling person of the CFC.
The controlling person is obliged to submit the CFC report. Article 39-2 of the Tax Code of Ukraine (Controlled Foreign Companies) comes into force on January 01, 2022. Thus, the controlling person submits a report on controlled foreign companies for 2022 at the same time as filing the annual declaration for 2023, including the adjusted profit of the controlled foreign company for 2023 indicated in such a report. The specifics of calculating the adjusted profit of a controlled foreign company come into effect on January 01, 2023.
Please note the following:
There is not much time left to decide on these issues: whether they are necessary, and if so, which ones and what status CFCs in the business structure, not required to be liquidated by legal procedures, should have. It is necessary to decide what assets should be left (created) for these companies, and information on them must be submitted in the financial statements of the CFC. It is possible to plan to receive official income from the CFC in the form of dividends (9% tax, less than on income from the asset management company).
K.A.C. Group experts will help to resolve these issues, as well as the following ones: