Reporting of a controlled foreign company (CFC)

Key Terms and Definitions:

Controlled Foreign Company (CFC):

A company registered abroad and controlled by a physical or legal person residing in Ukraine.

CFC Controller:

A person who has control over the company (more than 50% of shares or actual control).

Adjusted Profit:

The company’s profit, which after adjustments for certain non-taxable expenses and income, becomes subject to taxation in Ukraine.

Full Report:

A detailed report that includes all information about the CFC’s financial activities, which must be submitted when the company has complete financial statements.

Shortened Report:

A simplified form of the report that is submitted when the controller cannot timely prepare the CFC’s financial statements or if the reporting period in the country of registration does not align with the calendar year.

When to Submit the Report?

If you are an individual, the report should be submitted along with the annual property and income declaration.
If you are a legal entity, it should be submitted together with the corporate income tax declaration for the relevant calendar year.

Deadline for Submitting the CFC Report:

By the end of April – for individual controllers.
By the end of February – for legal entity controllers.

What else you need to know?

The CFC report is submitted in the year following the reporting year. In particular, in 2024, the CFC report for 2023 should be submitted, as well as, according to transitional provisions, for 2022. However, if the bill №8137 is adopted, the submission of reports will be postponed by one more year, meaning the report for 2024 can be submitted in 2025, not in 2024.
Each CFC controller is required to submit a CFC report once a year. This obligation does not depend on the company's status, presence of profit, or other circumstances. If the controller has a CFC, the report must be submitted regardless. The report is prepared by the controller based on the CFC’s annual financial statements, from which the adjusted profit is determined. The portion of adjusted profit corresponding to the controller’s share will be the tax base. The calculation is carried out by the controller independently and specified in the CFC report.
If the CFC’s profit is exempt from taxation, the controlling person is exempt from the obligation to calculate the adjusted profit (39-2.4.3 of the Tax Code). This means that if the controller is entitled to an exemption from CFC profit taxation in Ukraine, they are not required to calculate the adjusted profit but should indicate the reason for such exemption in the CFC report.
The report is submitted separately by each controller for each controlled foreign company. The report must be submitted through the Taxpayer's Electronic Cabinet in compliance with the requirements of the law regarding electronic document circulation and qualified electronic signature.
CFC reports must be submitted along with the tax declaration on property status and income. A shortened report is submitted if the controller is unable to prepare the CFC financial statements or calculate the adjusted profit on time. In particular, if the reporting period in the country of registration does not align with the calendar year, thus the preparation time for financial statements is longer. The shortened report does not require the company’s financial statements to be attached. In the case of submitting the shortened form, the full report must be submitted by the end of the calendar year. The full report differs from the shortened one in terms of the volume and content of the information submitted.

What Information Must Be Included in the Full CFC Report?

The name of the CFC, its address, organizational and legal form, tax registration number (if any), state registration number.
The controlling person’s share.
The ownership structure of the CFC.
Revenue from sales of goods (works, services) of the CFC, operating profit, and pre-tax profit according to the financial statements.
Calculation of adjusted profit.
Information on the basis for the exemption of CFC profit from taxation.
Dividends paid, profit received by the CFC.
List of operations the CFC conducted with non-residents.
Number of employees of the CFC at the end of the reporting (tax) year.
Information on the CFC’s profit received from its permanent representative office in Ukraine.

Avitar Will Help You:

Analyze whether CFC rules apply to you;
Determine if there are grounds for the exemption of CFC profit from taxation in Ukraine;
Develop a working model that helps reduce tax burden;
Analyze the CFC's financial statements and calculate the adjusted profit subject to taxation in Ukraine;
Navigate CFC reporting;
Prepare the property and income tax declaration;
Prepare CFC reports and notifications

Why Choose Us?

Professionalism and Experience:

Our experts have years of experience in tax law and CFC reporting, allowing us to effectively address any issues.

Individual Approach:

Every client has a unique situation, so we offer personalized solutions that take into account the specifics of your company and business.

Speed and Efficiency:

We guarantee timely submission of reports and assistance in case of any changes or difficulties that may arise during the process.

Tax Optimization:

Our specialists work on reducing clients’ tax burden by offering strategies for maximum tax exemptions where possible.

Full Support:

We provide assistance at all stages of report preparation, from consultations to submission of reports and declarations.

Case Study

Problem: The client, a large Ukrainian company owning several foreign assets, faced the necessity of submitting a CFC report for several years. There were issues regarding the calculation of adjusted profit and potential tax exemption.
Solution: Our specialists thoroughly analyzed the company's financial statements and helped calculate the adjusted profit. Afterward, we prepared and submitted the full CFC report through the Taxpayer’s Electronic Cabinet, along with the property and income tax declaration.
Result: The company successfully met all tax legislation requirements and reduced its tax burden by accurately calculating the adjusted profit and exempting part of the profit from taxation.

Contact us today for professional assistance in submitting CFC reports and resolving tax issues related to the control of foreign companies!

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Controlled foreign company (CFC) Reporting

What is CFC Reporting?