{"id":10055,"date":"2024-12-15T11:57:39","date_gmt":"2024-12-15T09:57:39","guid":{"rendered":"https:\/\/gls-law.company\/?p=10055"},"modified":"2025-01-07T14:56:42","modified_gmt":"2025-01-07T12:56:42","slug":"changes-in-the-legislation-on-cics-in-2024-analysis-of-innovations-adopted-by-the-verkhovna-rada-and-their-impact-on-business-with-foreign-assets","status":"publish","type":"post","link":"https:\/\/gls-law.company\/en\/changes-in-the-legislation-on-cics-in-2024-analysis-of-innovations-adopted-by-the-verkhovna-rada-and-their-impact-on-business-with-foreign-assets\/","title":{"rendered":"Changes in the legislation on CICs in 2024: Analysis of innovations adopted by the Verkhovna Rada and their impact on business with foreign assets"},"content":{"rendered":"\n

In 2024, significant changes were made to the legislation on controlled foreign companies (CFCs) in Ukraine, which affected businesses with foreign assets. These innovations are aimed at improving tax control and adapting to international standards.<\/p>\n\n\n\n

Main changes in the legislation on CFCs in 2024<\/strong><\/p>\n\n\n\n

    \n
  1. Definition of a controlling entity and CFCs
    The legislation has clarified the criteria for determining a controlling entity. Now a person is recognized as a controlling entity if he owns a stake in a foreign company of 50% or more. In addition, from 2024, the ownership threshold has been reduced to 10%, provided that the aggregate share of all residents of Ukraine in the company exceeds 50%.<\/li>\n\n\n\n
  2. Reporting and submission deadlines. Controlling entities are required to submit a CFC report together with the annual tax return. For individuals, this means submitting the report by May 1 of the following year, and for legal entities – by March 1. The report must contain detailed information about the CIC, including financial indicators and ownership structure.<\/li>\n\n\n\n
  3. Penalties and liability. For failure to submit or untimely submission of CIC reporting, significant fines are provided, which can reach hundreds of thousands of hryvnias. However, for the period of martial law and six months after its end, the legislation provides for a temporary exemption from penalties for violations related to CIC.<\/li>\n\n\n\n
  4. Automatic exchange of information (CRS). Ukraine has joined the Automatic Exchange of Information (CRS) standard, which obliges financial institutions to provide information on non-resident accounts. This increases transparency and makes tax evasion through foreign companies more difficult.<\/li>\n<\/ol>\n\n\n\n

    Impact on business with foreign assets<\/strong><\/p>\n\n\n\n

      \n
    • The introduction of new rules on CFCs has a significant impact on Ukrainian business with foreign assets:<\/li>\n\n\n\n
    • Increased tax burden: Controlling entities are required to include CFC profits in their tax base, which may lead to increased tax liabilities.<\/li>\n\n\n\n
    • Increased administrative burden: The need to prepare and submit detailed CFC reporting requires additional resources and time.<\/li>\n\n\n\n
    • Increased transparency: Automatic exchange of information makes it more difficult to use foreign companies to evade taxes, which encourages businesses to operate more transparently.<\/li>\n<\/ul>\n\n\n\n

      Recommendations for businesses<\/strong><\/p>\n\n\n\n

      In connection with the innovations, businesses are recommended to:<\/p>\n\n\n\n

        \n
      • Conduct an audit of foreign assets: Assess the ownership structure and determine whether foreign companies fall under the definition of CFCs.<\/li>\n\n\n\n
      • Adjust reporting processes: Establish internal procedures for timely and correct submission of CFC reporting.<\/li>\n\n\n\n
      • Consult with experts: Contact tax consultants to understand new requirements and minimize tax risks.<\/li>\n<\/ul>\n\n\n\n

        Given the dynamic changes in legislation, businesses should closely monitor innovations and adapt their activities in accordance with new requirements.<\/p>\n","protected":false},"excerpt":{"rendered":"

        In 2024, significant changes were made to the legislation on controlled foreign companies (CFCs) in Ukraine, which affected businesses with foreign assets. These innovations are aimed at improving tax control and adapting to international standards. Main changes in the legislation on CFCs in 2024 Impact on business with foreign assets Recommendations for businesses In connection […]<\/p>\n","protected":false},"author":4,"featured_media":10025,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[222,1],"tags":[],"class_list":["post-10055","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cfc","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/10055","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/comments?post=10055"}],"version-history":[{"count":1,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/10055\/revisions"}],"predecessor-version":[{"id":10056,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/10055\/revisions\/10056"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media\/10025"}],"wp:attachment":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media?parent=10055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/categories?post=10055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/tags?post=10055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}