Conditions under which a foreign company is recognized as controlled
Pursuant to subpara. 392.1.1 of the TCU, a controlled foreign company is any legal entity registered in a foreign state or territory that is recognized as being under the control of an individual resident of Ukraine or a legal entity resident of Ukraine in accordance with the rules set forth in the TCU. Therefore, a foreign company is recognized as a CFC if an individual or legal entity resident of Ukraine (controlling person)
a) owns a share in a foreign legal entity in the amount of more than 50%;
b) owns a share in a foreign legal entity in the amount of more than 10%, provided that several individuals - residents of Ukraine and/or legal entities - residents of Ukraine own shares in a foreign legal entity, the amount of which in aggregate is 50% or more;
c) individually or together with other Ukrainian residents and related parties, exercises actual control over a foreign legal entity.
At the same time, in accordance with clause 54 of subsection 10 of section XX "Transitional Provisions" of the TCU, sub-clause "b" of clause 392.1.2 of the TCU for 2022 - 2023 reporting (tax) years shall be applied in the following wording:
"b) owns a share in a foreign legal entity in the amount of 25 percent or more, provided that several individuals - residents of Ukraine and/or legal entities - residents of Ukraine own shares in a foreign legal entity, the amount of which in aggregate is 50 percent or more, or".
Subpara. 392.5.5 of the TCU, in particular, stipulates that an individual resident of Ukraine is obliged to notify the controlling authority of
- each direct or indirect acquisition of a share in a foreign legal entity or the beginning of the exercise of actual control over a foreign legal entity, which leads to the recognition of such an individual as a controlling person in accordance with the requirements of Article 392 of the TCU;
- establishment, creation or acquisition of property rights to a share in the assets, income or profit of an entity without the status of a legal entity;
- each alienation of a share in a foreign legal entity or termination of actual control over a foreign legal entity, which leads to the loss of recognition of such an individual as a controlling person in accordance with the requirements of Article 392 of the TCU;
- liquidation or alienation of property rights to a share in the assets, income or profits of an entity without the status of a legal entity.
The notification shall be sent to the supervisory authority within 60 days from the date of such acquisition (commencement of actual control) or alienation (termination of actual control).
The form of the Notification on the acquisition (commencement of actual control) or alienation of a share (termination of actual control) by a resident in a foreign legal entity or property rights to a share in the assets, income or profit of an entity without the status of a legal entity (hereinafter - the Notification) is approved by the order of the Ministry of Finance dated 22.09.2021 No. 512.