{"id":12086,"date":"2025-05-06T18:32:03","date_gmt":"2025-05-06T15:32:03","guid":{"rendered":"https:\/\/gls-law.company\/?p=12086"},"modified":"2025-05-06T18:32:05","modified_gmt":"2025-05-06T15:32:05","slug":"supreme-court-orders-pjsc-yuzhgzk-to-pay-uah-3-7-billion-what-went-wrong","status":"publish","type":"post","link":"https:\/\/gls-law.company\/en\/supreme-court-orders-pjsc-yuzhgzk-to-pay-uah-3-7-billion-what-went-wrong\/","title":{"rendered":"Supreme Court Orders PJSC &#8220;YuzhGZK&#8221; to Pay UAH 3.7 Billion: What Went Wrong?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">In April 2025, the Supreme Court of Ukraine issued a ruling that sent a strong message to all companies using offshore structures for tax optimization. PJSC &#8220;YuzhGZK&#8221; has been ordered to pay UAH 3.7 billion in taxes and penalties due to the improper application of a reduced withholding tax rate when distributing dividends to Cypriot companies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\ud83d\udccc <strong>Case Summary<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Over three years, &#8220;YuzhGZK&#8221; distributed UAH 29.8 billion in dividends to 12 Cypriot companies, applying a preferential 5% rate under the Double Taxation Treaty between Ukraine and Cyprus.<\/li>\n\n\n\n<li>Only UAH 1.49 billion in tax was paid to the state.<\/li>\n\n\n\n<li>The tax authorities discovered that the Cypriot companies were technical entities and not the actual (beneficial) owners of the income, as the funds were promptly transferred to Dutch resident companies.<\/li>\n\n\n\n<li>The Supreme Court upheld the tax authority&#8217;s position and ruled the reduced rate application unlawful.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">\ud83d\udd0d <strong>Why Does It Matter?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This ruling highlights that formal compliance with international treaties is not enough. Companies must prove the actual beneficial ownership of income. Otherwise, they risk additional tax assessments and significant financial penalties.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\ud83e\udde0 <strong>Takeaways for Businesses<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Counterparty Verification<\/strong>: It\u2019s essential to verify the ownership structure of dividend recipients to confirm their status as beneficial owners.<\/li>\n\n\n\n<li><strong>Documentary Evidence<\/strong>: A certificate of tax residency is not sufficient. Additional proof is needed to demonstrate real control and use of the funds by the recipient company.<\/li>\n\n\n\n<li><strong>Expert Consultation<\/strong>: Before engaging in major financial transactions, seek advice from tax professionals to mitigate compliance risks.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">\ud83d\udce3 <strong>Conclusion<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The &#8220;YuzhGZK&#8221; case is a clear reminder that attempts to optimize taxes via offshore arrangements can lead to serious financial consequences. Transparency, legal compliance, and proper documentation are critical for safe and sustainable business operations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In April 2025, the Supreme Court of Ukraine issued a ruling that sent a strong message to all companies using offshore structures for tax optimization. PJSC &#8220;YuzhGZK&#8221; has been ordered to pay UAH 3.7 billion in taxes and penalties due to the improper application of a reduced withholding tax rate when distributing dividends to Cypriot [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":12071,"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":[297],"tags":[],"class_list":["post-12086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-dividends"],"_links":{"self":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/12086","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=12086"}],"version-history":[{"count":1,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/12086\/revisions"}],"predecessor-version":[{"id":12087,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/12086\/revisions\/12087"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media\/12071"}],"wp:attachment":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media?parent=12086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/categories?post=12086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/tags?post=12086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}