Launching CRS in Ukraine: what should we know?
17 October, 2024
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Ukraine successfully carried out its first international automatic data exchange under the Common Reporting Standard (CRS) aimed at automatic exchange of information upon financial accounts!
Let us point out:
CRS standard is an international standard that requests financial agents of member states to collect information upon financial accounts and their owners’ residence. In the future, tax authorities of member states will annually exchange the collected information on an automatic basis.
On June 26, 2024, the State Tax Service received a report on Ukraine’s readiness to exchange information for tax purposes approved by the OECD global forum.
Therefore, now Ukraine is an equal partner in the international system of automatic data exchange which includes all EU member states.
First deadline for data exchange in Ukraine was September 30, 2024. Information upon reportable accounts for the reporting period from July 1, 2023, till December 31, 2023, was subject to exchange. In the future, automatic data exchange will be carried out every year. The reporting period usually makes up one calendar year preceding the year of data exchange.
In the framework of such exchange, the State Tax Service of Ukraine accumulated and transferred information upon non-residents’ financial accounts to the tax authorities of exchange partner jurisdictions, as well as received data upon the Ukrainian tax residents’ accounts from foreign competent bodies.
The subject of exchange was information upon financial accounts maintained by financial institutions (banks, insurance and investment companies, etc.) and owned by residents of partner jurisdictions, namely: owner’s name, his/her/its address, tax residency, taxpayer’s number, date and place of birth, data about financial institution, data about account, such as balance in the end of reporting period, aggregate amount of dividends, interest or other income.
1. Impact on natural persons. In the framework of data exchange, tax authorities will receive information upon accounts and balances, regardless of the amounts. However, during martial law, the State Tax Service cannot use information for independent additional accrual of taxes on financial accounts owned by a single person –citizen of Ukraine, unless balances on such accounts in aggregate exceed the equivalent of 250 thousand USD as of December 31 of the calendar year that falls on duration of martial law in Ukraine.
Accounts with balance exceeding 250 thousand USD at the end of the year will automatically be subject to reporting, which provides additional risks for those who failed to declare their income abroad.
2. Impact on foreign company owners. Information about Ukrainian tax residents’ foreign companies will be submitted to the Ukrainian tax authorities if such companies are treated as passive (i.e. passive income, such as dividends, interest, etc., exceeds 50% of aggregate income). It will serve as a tool for disclosing information about Ukrainian tax residents’ controlled foreign companies (CFC) and will strengthen control over rules for reporting and taxation thereof.
Interlegal law team will help you to settle CRS issues and will offer the following services to its Clients:
- Consulting upon issues of the Common Reporting Standard (CRS) and its impact on your personal account or your controlled company’s account;
- Legal assistance in determining the type of account owner as per СRS classification and drafting a legal opinion thereon, filling-in self-assessment forms for a bank or another financial agent;
- Full legal support of Clients during СRS audits and other compliance procedures both by Ukrainian and foreign financial institutions.
For the detailed information upon avoidance of business risk due to implementation of CRS rules, please do not hesitate to contact Interlegal lawyer Dmytro Bondar who will answer all your questions with great pleasure!
