Tax reform 2027-2028

New approaches to individual residency, effective management of foreign companies, dual residency and CFC implications.

• Moving away from the sequential individual residency test;
• The significance of housing, family, sole trader status and economic ties to Ukraine;
• Updates to the 11 management criteria for corporate residency;
• Tax relief for foreign companies recognised as Ukrainian residents;
• CFC reporting for people with dual residency

Broader transfer pricing rules, revised financial thresholds and a new approach to documentation.

• Extending transfer pricing to certain domestic Ukrainian transactions;
• Additional transfer pricing risks: investment funds, sole traders, simplified-tax companies and loss-making counterparties;
• Series of transactions and unrelated intermediaries;
• Restructuring and transfers of functions, risks and intangibles;
• New transfer pricing documentation, penalties and the cost of mistakes

New rules for borrowing and transactions with a financing component;

• New limits on excessive borrowing costs in financial models;
• Effects on credit, loans, leasing and factoring;
• Deferred and instalment payments in commercial contracts;
• Tax risks associated with parent-company guarantees and beneficiary sureties.

Revised approaches to CFC taxation, asset transfers and other indirect taxes

• Changes in tax rates and penalties;
• Moving to a CFC model that taxes passive income only;
• Reviewing key CFC exemptions and removing the EUR 2 million exemption threshold;
• Removing pass-through dividends and securities adjustments;
• Transfers of assets or activities abroad: a Ukrainian version of exit tax.
• Permanent establishments and property-rich companies.
• Case study: a structure relying on a single exemption.

Restoring ordinary prices and introducing a general anti-abuse rule

• The Ukrainian version of GAAR
• New terminology: tax abuse, reasonable economic grounds, incidental benefit and more
• A new approach to management services, royalties, centralised purchasing and intra-group payments.
• The burden of proof and documenting economic benefits before an audit.

Proposed rules against artificial business fragmentation and changes to sole trader arrangements.

• Limits on cooperation with current or former employers.
• Potential differentiated rates and the consequences of transactions being classified as abusive.
• Future VAT reform and its effect on margins.

The tax calendar and reforms to watch.

• Updates to automatic tax information exchange standards.
• Taxation of digital platforms and e-commerce
• Planned rules for virtual assets.
• Capital markets, investment funds and collective investment institutions.
• Reform of capital markets, investment funds and collective investment structures.