Annual Declaration of Tax Residents of Ukraine

Annual Declaration of Tax Residents of Ukraine Based on the Current Place of Residence and Business

The armed aggression of the Russian Federation against Ukraine forced millions of Ukrainians to leave abroad. A significant number of our citizens open businesses in other countries and expand the geography of their activities, including while staying in Ukraine. Therefore, the question arises in which country it is necessary to declare received incomes and pay taxes on them, at what rates and in what manner.

Tax Code of Ukraine defines that an individual is a resident of Ukraine if such a person:

has a place of residence in Ukraine, while also having a temporary place of residence in a foreign country; they are considered a resident of Ukraine if they have a permanent place of residence in Ukraine;
if a person also has a place of permanent residence in a foreign country, they are considered a resident if they have closer personal or economic ties (center of vital interests) in Ukraine. If it is impossible to determine the center of life interests, a person is considered a resident if they stay in Ukraine for at least 183 days during the tax year;
if it is impossible to determine the resident status of an individual using the previous rules, the individual is considered a resident if they are a citizen of Ukraine.

Similar definitions of tax residency exist in most states. Situations are possible when two states simultaneously consider a person to be their resident and claim to tax their income. In such cases, the provisions of the International Treaties on the Avoidance of Double Taxation of Income between Ukraine and foreign countries, which have priority over the norms of the local legislation of the participating countries, shall apply.

In Ukraine, there is no official procedure for the loss or cancellation of tax resident status. If a person loses Ukrainian citizenship, they actually lose the status of a tax resident. If a person has received a Certificate of Permanent Residence Abroad, the fact of a change in tax residency is evidenced by:

deregistration of the place of residence in Ukraine and subsequent stay in Ukraine for less than 183 days during the tax year;
presence of foreign assets: own dwelling, business and bank accounts in another country;
assignment of a tax number, payment of taxes in another state;
availability of medical insurance; payment of utility bills and other payments at the new place of residence, which confirms the change in economic and vital interests;
court decision on loss of tax resident status.

It should be remembered that the tax authorities of Ukraine consider as residents all Ukrainians who, when leaving abroad, did not submit the latest tax declaration and did not receive a certificate about the absence of obligations to the budget. Such a declaration shall be submitted no later than 60 calendar days prior to departure abroad for permanent residence (PR). When traveling abroad, the PR declaration shall be submitted for the last three reporting tax periods and for the reporting period of the current year. In general, tax declarations for the past reporting (tax) year shall be submitted annually by May 1.

Who is obliged to declare the received income for the reporting year?

natural persons – controllers of foreign companies (CFCs) who submit the first CFC report for the 2022 reporting (tax) year in 2023;
residents who carried out transactions with investment assets (securities, corporate rights) in Ukraine and received dividends;
persons who received income from foreign sources (salary, remuneration under civil law contracts, etc.), including citizens who received assistance from foreign countries and their state funds, as well as dividends from foreign companies;
persons who received income from leasing, renting or subleasing property, if the lessee is a natural person and not a business entity;
persons who carried out transactions on the alienation of property (according to contracts of sale, gift, exchange, etc.).

K.A.C. Group offers citizens living or temporarily staying outside of Ukraine or having business abroad professional consulting services in the field of taxation of their income in Ukraine and abroad and preparation for submitting the Declaration for 2023:

Collection and analysis of data and documents necessary for establishing the client’s tax residency, verification using information and analytical services under the KYC standard, conducting a complex legal audit of the situation (due diligence). From UAH 8,000.
Consultations on the taxation of the income of citizens and their businesses both in Ukraine and abroad, determining the scope of the client’s tax obligations, taking into account the application of a CRS (automatic exchange of fiscal and financial information) standard. From UAH 10,000.
Drawing up an individual action plan which considers the specifics of an individual situation, providing personal recommendations, taking into consideration the requirements of current legislation and the practice of its application. From UAH 20,000.
Professional support in the preparation and submission by residents of Ukraine of the tax declaration on property status and income. From UAH 10,000.
Consultations and preparation of necessary documents for declaring in the country of stay. Prevention of “multiple tax residency”. From UAH 8,000.
If needed, involvement of foreign partners to obtain consultations on issues that will require special knowledge and relate to the legislation of other countries. From UAH 10,000.
Current consultations on taxation, customs, currency control and other issues.
Representation of the interests of taxpayers before the tax authorities of Ukraine, if necessary, appealing against illegal decisions, claims, actions/inaction of the tax authority in an administrative or judicial procedure.