Clarification of the State Tax Service regarding some columns of the report on controlled foreign companies and notice about CFC

Clarification of the State Tax Service regarding some columns of the report on controlled foreign companies and notice about CFC

The State Tax Service in the ІПК dated 27/05/2026 No. 3048/IPC/99-00-24-03-03 provided clarifications regarding filling in columns 21.2 (exchange rate of conversion into hryvnia), 23 – 24 (profit of CFC) in the presence of a loss, 27 (profit of CFC, exempt from taxation) and also provided answers to some questions regarding the notification about CFC.

Regarding column 21.2.

Information on the official exchange rate of the hryvnia to foreign currencies is posted daily on the page of the official Internet representation of the NBU at the link: https://bank.gov.ua/ua/markets/exchangerates.

The NBU publishes information on the average official exchange rate of the hryvnia to foreign currencies for the period on the pages of its official Internet representative office (at the link: https://bank.gov.ua/files/Exchange_r.xls).

Thus, the taxpayer must calculate the adjusted profit of the CFC based on the indicators of the financial statements of the CFC for the relevant reporting (tax) period during which the taxpayer owns a share of the CFC, and convert it into hryvnia at the weighted average official exchange rate of the NBU, published on the NBU website.

Regarding columns 23-24 and 27, if CFC incurred losses for the reporting period.

Columns 23, 24 of the CFC Report reflect a negative value in accordance with the financial statements of the CFC, if the company actually incurred losses. Column 27 "Profit of a CFC exempt from taxation" is not filled out in such a situation, since there is no actual profit.

Regarding the notification about a CFC.

- Is there an obligation to submit a notification in the event of an additional acquisition (increase of shares) or partial alienation (reduction of shares)?

A foreign company is recognized as a CFC if an individual resident of Ukraine or a legal entity resident of Ukraine (controlling entity):

a) owns a share in a foreign legal entity in the amount of more than

50 percent, or

b) owns a share in a foreign legal entity in the amount of more than

10 percent, 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

c) individually or together with other residents of Ukraine - related persons exercises actual control over the foreign legal entity.

According to subparagraph 392.5.5 of paragraph 392.5 of Article 392 of the Code, an individual (legal entity) - a resident of Ukraine is obliged to notify the regulatory 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 individual (legal entity) as a controlling entity in accordance with the requirements of Article 392 of the Code;

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 the cessation of the exercise of actual control over a foreign legal entity, which leads to the loss of the recognition of such individual (legal entity) as a controlling entity in accordance with the requirements of Article 392 of the Code;

liquidation or alienation of property rights to a share in assets, income or profit of an entity without the status of a legal entity.

Thus, an individual resident of Ukraine who is a direct or indirect owner (controller) of a CFC is obliged to notify the regulatory authority, in particular, about the acquisition/alienation of a share in a foreign legal entity and/or the exercise of actual control over a foreign legal entity within the terms specified in subparagraph 392.5.5 of paragraph 392.5 of Article 392 of the Code.

At the same time, if a taxpayer additionally acquires a share in a CFC, which does not lead to a change in its status as a controlling entity, then in this case there is no need for such a taxpayer to submit a notification of an increase in the ownership share in the CFC, since the total ownership share in such a CFC is subject to reflection in the Report on CFC.

- Is it considered an error not to fill in line 15.1 of the Notification (information on a resident person with whom joint ownership of shares in a foreign legal entity is carried out) if such information actually existed at the time of submitting the Notification? Will penalties be applied to the controlling person in this case?

If the controlling person makes an error when filling in the fields of the Notification, such person has the right to send a corrected Notification indicating in field 24 additional information (explanation) of the reason for submitting such Notification.

Clause 120.7 of Article 120 of the Code provides that failure by a controlling person to notify the controlling body of the acquisition of a share in a foreign legal entity, an entity without the status of a legal entity, or of the beginning of the exercise of actual control over a foreign legal entity, or of the alienation of a share in a foreign legal entity, or of the termination of the exercise of actual control over a foreign legal entity within the terms provided for in subparagraph 392.5.5 of paragraph 392.5 of Article 392 of the Code shall entail the imposition of a fine in the amount of 300 subsistence minimums for an able-bodied person established by law as of January 1 of the tax (reporting) year, for each such fact.

According to paragraph 72 of subsection 10 of section XX “Transitional provisions” of the Code, for violations committed during the period from January 1, 2022 and during the martial law in Ukraine, introduced by the Decree of the President of Ukraine “On the introduction of martial law in Ukraine” dated February 24, 2022 No. 64/2022, approved by the Law of Ukraine “On approval of the Decree of the President of Ukraine “On the introduction of martial law in Ukraine” dated February 24, 2022 No. 2102-IX, until the last calendar day (inclusive) of the calendar month in which martial law will be terminated or canceled, in particular, taxpayers are not subject to penalties – for violations provided for in paragraphs one to eight of paragraph 120.7 of Article 120 of the Code, provided that the controlling person fulfills the duties provided for in Article 392 of this Code, within six months after the termination or cancellation of martial law.

Thus, the controlling person will not be subject to penalties for violations committed in the period from January 1, 2022 and during the martial law in Ukraine until the last calendar day (inclusive) of the calendar month in which martial law is terminated or lifted, provided that the controlling person fulfills the duties stipulated in Article 392 of the Code within six months after the termination or lifting of martial law.