Interlegal lawyers consulted the client upon legal effects of the Law No. 466 for its business
A regular client applied to Interlegal for legal advice upon legal effects due to entry into force of amendments to the Tax Code of Ukraine, introduced by the Law No. 466. Such amendments concern changes in cooperation with non-resident companies.
The client had a complex corporate structure of asset ownership in Ukraine. At the moment of incorporating the holding structure in Cyprus, the instrument acted as defense of assets and fully justified its content.
As soon as the Law No. 466 was adopted, the client got concerned of potential legal effects for the current structure. With regards to its business sale plans, one of the issues concerned tax consequences of the Ukrainian business sale by means of participatory interests of a non-resident company.
Interlegal lawyers advised upon tax consequences in Ukraine during such a deal. An innovation is the need to pay repatriation tax on non-resident’s incomes in Ukraine, if the cost of assets is facilitated, at least at 50%, at the expense of participatory interests owned by the Ukrainian company, whose assets are formed, at least at 50%, at the expense of real estate. Amendments have been valid since 01.07.2020.
In addition, the client was offered to introduce an investor into the structure with minimal tax consequences.
Interlegal lawyers also advised the client upon the following personal matters:
- legal effects of launching CFC Rules (controlled foreign companies);
- prospects before taxation of profits earned by the Cypriot holding company;
- offered options of risk mitigation for the owner in Ukraine, jointly with possible restructuring options in order to mitigate taxation while using a holding structure.
We always warn our clients that the current corporate structures being incorporated according to the old rules are no longer working.
Due to new amendments to tax legislation, in most cases maintenance of similar structures becomes inappropriate. It is important to revise them in due time and to plan the deal in advance, in view of today conditions and requirements.
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