- A Ukrainian resident owns a foreign company and has not filed a CFC report.
- The tax authority has challenged treaty relief on dividends paid to a holding company abroad.
- Two shareholders in a Ukrainian LLC need a governance mechanism before a dispute becomes a deadlock.
- A group holds Ukrainian assets through a jurisdiction that is no longer acceptable to its banks.
- A founder wants to consolidate assets ahead of a sale or a generational transfer.
Overview
Ukraine's adoption of controlled foreign company rules and its accession to the BEPS framework changed the calculus for every group holding Ukrainian assets through an offshore vehicle. Structures built for confidentiality and low tax now attract reporting obligations, beneficial ownership challenges and, in the worst case, denial of double taxation treaty relief on dividends, interest and royalties.
Our structuring work has two directions. For groups entering Ukraine, we design the ownership chain from the outset so that it is defensible: real substance in the holding jurisdiction, commercially rational financing, and documentation that supports the beneficial ownership position. For groups already invested, we audit the existing chain, quantify the exposure and implement a migration path that does not itself trigger a taxable event.
Typical situations
Scope of work
What we do
The matters we handle within this practice. Engagements are usually a combination of several of them rather than a single item.
01
Structure design
Selection of the holding jurisdiction with reference to treaty network, substance requirements, exit taxation and the group's own reporting obligations.
02
CFC analysis
Assessment of controlled foreign company status for Ukrainian resident owners, calculation of adjusted profit and preparation of the annual CFC report.
03
Substance
Practical guidance on what constitutes adequate substance in the holding jurisdiction and how it is documented so as to withstand a beneficial ownership challenge.
04
Shareholder agreements
Ukrainian-law and foreign-law shareholder agreements, corporate agreements under the LLC Act, deadlock mechanics, drag-along and tag-along provisions.
05
Group reorganisation
Mergers, demergers, spin-offs, share-for-share exchanges and contributions in kind, with the tax and antitrust consequences mapped in advance.
06
Intragroup financing
Loan structuring, thin capitalisation and interest deduction limits, currency control compliance and registration of cross-border loans.
07
Family and succession
Holding arrangements for private clients, including trusts and foundations recognised for Ukrainian purposes and succession planning for business assets.
08
Exit preparation
Restructuring ahead of a sale so that the target is clean, the chain is transparent and the buyer's due diligence does not reprice the deal.
How we work
From first call to completion
A predictable sequence with a written output at each stage, so that you always know the position and what it will cost to reach the next one.
01
Mapping
We chart the existing ownership, financing and cash flows, and identify where the structure is exposed.
02
Options memo
Two or three viable target structures, each costed and assessed for tax, regulatory and practical feasibility.
03
Implementation
Corporate documents, regulatory filings, notifications and, where needed, merger control clearance.
04
Maintenance
Annual CFC reporting, substance review and adjustment as the group and the rules evolve.
Why clients instruct us
Local knowledge, international standards
We work the way our clients' in-house teams and international counsel expect: clear scope, written advice, English-language reporting and no surprises on fees.
- Advice in English, drafted to be usable by a board that does not know Ukrainian law.
- Fee estimates agreed before work begins, with fixed fees where the scope allows.
- A named partner responsible for the matter, not a rotating team.
- Practising in Ukraine since 2003, through every regulatory cycle since.
Questions
Frequently asked
When does a Ukrainian resident have to report a controlled foreign company?
Broadly, where a Ukrainian tax resident holds more than fifty per cent of a foreign company, or more than ten per cent where Ukrainian residents together hold more than fifty per cent, or exercises actual control regardless of formal shareholding. The report is due annually and applies even where no profit is distributed. Penalties for non-filing are significant and accrue independently of any tax liability.
Will restructuring trigger Ukrainian tax?
It can. Transfers of shares in a company whose value derives substantially from Ukrainian real estate are taxable in Ukraine even when both parties are non-residents. Contributions in kind, mergers and share exchanges each have their own treatment. This is precisely why we model the tax outcome before any document is signed.
Is an offshore holding company still workable?
It depends entirely on what you mean by offshore and what the company actually does. A holding vehicle with no employees, no office and no decision-making will struggle to claim treaty benefits and may fail bank compliance. A properly resourced holding company in a treaty jurisdiction remains a legitimate and common arrangement.
Can a shareholder agreement be governed by English law?
Yes, and for joint ventures with a foreign participant this is common. Certain matters — the register of shareholders, corporate procedure, and enforcement against the Ukrainian entity itself — remain governed by Ukrainian law, so we typically pair a foreign-law shareholder agreement with a Ukrainian-law corporate agreement.
Related
Practices that usually come with this one
01
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Read more →03Mergers & Acquisitions
Transactions fail on the details that were not checked and the conditions that were not drafted. We run acquisitions a…
Read more →08Due Diligence
Due diligence is not a document-collection exercise. It is the process of establishing what you are actually buying an…
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Next step
Discuss your matter with us
Tell us what you need to achieve in Ukraine. The first consultation is free and confidential — we will tell you candidly whether we are the right firm for the task.