Filling in the CFC Report by the controlling person

Does the controlling person fill in columns 31-33 of the CFC Report if there are indicators for filling them in, if the total aggregate income of all CFCs of the same controlling person from all sources according to the financial statements does not exceed the equivalent of EUR 2 million at the end of the reporting period?

Paragraph ³⁹² of the TCU sets out the requirements for the preparation and submission of the Report on Controlled Foreign Companies. In particular, subpara. ³⁹².5.2 of the TCU provides that controlling persons are obliged to submit the Report on Controlled Foreign Companies to the controlling authority simultaneously with the submission of the annual declaration of property status and income or corporate income tax return for the relevant calendar year by means of electronic communication in electronic form in compliance with the requirements of the Laws of Ukraine No. 851-IV "On Electronic Documents and Electronic Document Management" dated May 22, 2003 and No. 2155-VIII "On Electronic Identification and Electronic Trust Services" dated October 05, 2017.

The Report on Controlled Foreign Companies must be accompanied by duly certified copies of the financial statements of the controlled foreign company confirming the amount of profit of the controlled foreign company for the reporting (tax) year.

The conditions for exemption from taxation of profits of a controlled foreign company are regulated by clause ³⁹².4 of the Tax Code.

Regardless of the fulfillment of the conditions stipulated by subpara. ³⁹².4.1 of the TCU, the adjusted profit of a controlled foreign company is not subject to inclusion in the total taxable income, in particular, if the total aggregate income of all controlled foreign companies of one controlling person from all sources according to the financial statements does not exceed the equivalent of EUR 2 million at the end of the reporting period (subpara. ³⁹².4.2.1 of the TCU).

According to subpara. ³⁹².4.3 of the TCU, if the profit of a controlled foreign company is exempt from taxation in accordance with the provisions of this paragraph, the controlling person is exempt from the obligation to calculate the adjusted profit of the controlled foreign company in accordance with the provisions of subpara. ³⁹².3.2 of the TCU.

The Order of the Ministry of Finance No. 254 dated 25.08.2022 approved the form of the Report on Controlled Foreign Companies, the form of the abbreviated Report on Controlled Foreign Companies (hereinafter - the Report), the Procedure for filling out the Report on CFCs, the abbreviated form of the Report on CFCs and submission to the supervisory authority (hereinafter - the Procedure).

The Report and the Procedure clearly define the names of the columns and the procedure for filling them out, i.e., the columns of the Report on Controlled Foreign Companies that contain indicators for declaration must be filled in.

If the total aggregate income of all controlled foreign companies of the same controlling person from all sources according to the financial statements does not exceed the equivalent of EUR 2 million at the end of the reporting period, then in the Report of each controlled foreign company in the section "Information on the controlled foreign company", column 28.3 is filled in by putting an "x" in column 28.3.1.

Columns 31 - 33 shall reflect the transactions of the controlled foreign company with non-residents, indicating: the list of transactions, the full name of the non-resident, the name of the state (territory), the country code, the taxpayer code, in particular

♦ column 31 of the Report shall contain the list of transactions of the controlled foreign company with non-residents registered in the states (territories) included in the list of states (territories) approved by the CMU in accordance with sub-clause 39.2.1 of the TCU, with a complete list of transactions conducted with such non-residents (full name of the non-resident, name of the state (territory), country code and taxpayer code shall be indicated). The information shall be provided for each transaction separately.

The list of states (territories) is approved by the Resolution of the Cabinet of Ministers of Ukraine No. 1045 dated 27.12.2017 "On Approval of the List of States (Territories) that Meet the Criteria Established by Subparagraph 39.2.1.2 of the Tax Code and Invalidation of the Resolution of the Cabinet of Ministers of Ukraine No. 977 dated 16 September 2015";

♦ column 32 of the Report shall contain a list of transactions of the controlled foreign company with non-residents - related parties, with a complete list of transactions conducted with such non-residents (full name of the non-resident, name of the state (territory), country code and taxpayer code). The information shall be provided for each transaction separately;

♦ column 33 of the Report shall contain a list of transactions of the controlled foreign company with non-residents whose legal form is included in the list approved by the CMU in accordance with sub-clause "d" of clause 39.2.1.1 of the TCU, with a complete list of transactions conducted with such non-residents (full name of the non-resident, name of the state (territory), country code and taxpayer code shall be indicated). The information shall be provided for each transaction separately.

The list of organizational and legal forms was approved by the Resolution of the Cabinet of Ministers of Ukraine No. 480 dated 04.07.2017 "On Approval of the List of Organizational and Legal Forms of Non-Residents that Do Not Pay Income Tax (Corporate Tax), Including Tax on Income Received Outside the State of Registration of Such Non-Residents and/or Are Not Tax Residents of the State in Which They Are Registered as Legal Entities".

Please note that Art. ³⁹² of the TCU does not establish any specific rules or exceptions for the controlling person regarding the failure to reflect in the CFC Report the information specified in subpara. ³⁹².5.3 of the TCU, and therefore, such information should be reflected in the relevant columns of the Report.

Thus, in case of exemption from taxation of CFC's profit in accordance with the requirements of clause ³⁹².4 of the TCU, there are no legal grounds for failure to reflect in the Report the information specified, in particular, in sub-clause "g" of clause ³⁹².5.3 of the TCU, which is indicated in columns 31-33 of the Report.