CFC without Risks: Taxation, Reporting and Declaration

07/ 10/ 2026

On 6 October, the Southern Ukrainian Office of the European Business Association held a joint meeting of the EBA Odesa Legal Committee and Finance-Tax Committee dedicated to the current issues of taxation, reporting and declaration of Controlled Foreign Companies (CFCs). The joint format of the meeting allowed participants to comprehensively explore CFC-related matters from both legal and tax perspectives — from determining the controlling person and control criteria to practical aspects of preparing CFC reports, applying tax exemption provisions, and interacting with tax authorities. The meeting was moderated by Artur Nitsevych, Head of the EBA Odesa Legal Committee and Partner at Interlegal, and Vitalii Smerdov, Head of the EBA Odesa Finance-Tax Committee and Managing Partner at First Pro Tax. The main presentation was delivered by Dmytro Bondar, Leading Lawyer at Interlegal. At the beginning of the meeting, participants noted that the practice of applying CFC rules in Ukraine continues to develop actively. According to Vitalii Smerdov, tax authorities have recently significantly intensified their work in this area and are increasingly sending taxpayers requests concerning CFCs and related tax matters. During the main part of the meeting, Dmytro Bondar covered the key rules for determining a CFC and its controlling person, including ownership and control criteria, as well as the main tax obligations of Ukrainian residents who control a foreign company. Particular attention was paid to CFC reporting. Participants discussed the procedure for notifying the authorities about acquiring or losing the status of a controlling person, submitting abbreviated and full CFC reports, and the specifics of calculating adjusted profit. The speaker also addressed situations where a foreign companys reporting period does not coincide with the Ukrainian calendar year, as well as cases where control is lost during the reporting period. An important part of the meeting focused on the grounds for exempting CFC profits from taxation. In particular, participants discussed criteria related to the CFCs income level, international treaties and the effective tax rate, as well as the specifics of documenting and confirming the relevant grounds. The practical part of the meeting focused on typical situations faced by owners and controlling persons. Among other cases, the speaker considered a case involving a Cypriot company concerning the crediting of corporate tax paid abroad against tax liabilities in Ukraine. The example demonstrated the importance of proper documentary confirmation of foreign tax payments and correct income reporting. Participants also discussed the approaches used by tax authorities to obtain information about foreign companies. The tools that may be used to identify CFCs include data from the Ukrainian Unified State Register, automatic exchange of tax information, publicly available foreign registers and international requests. During the discussion, Artur Nitsevych and Vitalii Smerdov, together with the speaker, also addressed the practice of tax authority requests. According to Vitalii Smerdov, his practice received around 8–9 such requests during the summer alone, which, in his view, indicates a noticeable increase in the tax authorities attention to international taxation. Participants also discussed the tax residency of owners of foreign companies, particularly in situations where an individual resides abroad but maintains connections with Ukraine. This aspect is important for determining the scope of tax obligations and the application of CFC rules. The meeting provided an opportunity not only to review legislative requirements, but also to discuss their practical application, common mistakes and the approaches taken by tax authorities. As Artur Nitsevych noted, it is important for participants to gain not only an understanding of the legislative framework, but also practical recommendations that can help them manage CFC reporting more effectively. We thank Dmytro Bondar, Artur Nitsevych, Vitalii Smerdov and the Interlegal team for their expertise, practical cases and insightful discussion, as well as all participants for their active engagement and interest in the topic. Joint events of the EBA Odesa Legal and Finance-Tax Committees will continue to serve as a platform for discussing current issues that directly affect business operations.

The joint format of the meeting allowed participants to comprehensively explore CFC-related matters from both legal and tax perspectives — from determining the controlling person and control criteria to practical aspects of preparing CFC reports, applying tax exemption provisions, and interacting with tax authorities.

The meeting was moderated by Artur Nitsevych, Head of the EBA Odesa Legal Committee and Partner at Interlegal, and Vitalii Smerdov, Head of the EBA Odesa Finance-Tax Committee and Managing Partner at First Pro Tax.

The main presentation was delivered by Dmytro Bondar, Leading Lawyer at Interlegal.

At the beginning of the meeting, participants noted that the practice of applying CFC rules in Ukraine continues to develop actively. According to Vitalii Smerdov, tax authorities have recently significantly intensified their work in this area and are increasingly sending taxpayers requests concerning CFCs and related tax matters.

During the main part of the meeting, Dmytro Bondar covered the key rules for determining a CFC and its controlling person, including ownership and control criteria, as well as the main tax obligations of Ukrainian residents who control a foreign company.

Particular attention was paid to CFC reporting. Participants discussed the procedure for notifying the authorities about acquiring or losing the status of a controlling person, submitting abbreviated and full CFC reports, and the specifics of calculating adjusted profit. The speaker also addressed situations where a foreign company’s reporting period does not coincide with the Ukrainian calendar year, as well as cases where control is lost during the reporting period.

An important part of the meeting focused on the grounds for exempting CFC profits from taxation. In particular, participants discussed criteria related to the CFC’s income level, international treaties and the effective tax rate, as well as the specifics of documenting and confirming the relevant grounds.

The practical part of the meeting focused on typical situations faced by owners and controlling persons. Among other cases, the speaker considered a case involving a Cypriot company concerning the crediting of corporate tax paid abroad against tax liabilities in Ukraine. The example demonstrated the importance of proper documentary confirmation of foreign tax payments and correct income reporting.

Participants also discussed the approaches used by tax authorities to obtain information about foreign companies. The tools that may be used to identify CFCs include data from the Ukrainian Unified State Register, automatic exchange of tax information, publicly available foreign registers and international requests.

During the discussion, Artur Nitsevych and Vitalii Smerdov, together with the speaker, also addressed the practice of tax authority requests. According to Vitalii Smerdov, his practice received around 8–9 such requests during the summer alone, which, in his view, indicates a noticeable increase in the tax authorities’ attention to international taxation.

Participants also discussed the tax residency of owners of foreign companies, particularly in situations where an individual resides abroad but maintains connections with Ukraine. This aspect is important for determining the scope of tax obligations and the application of CFC rules.

The meeting provided an opportunity not only to review legislative requirements, but also to discuss their practical application, common mistakes and the approaches taken by tax authorities. As Artur Nitsevych noted, it is important for participants to gain not only an understanding of the legislative framework, but also practical recommendations that can help them manage CFC reporting more effectively.

We thank Dmytro Bondar, Artur Nitsevych, Vitalii Smerdov and the Interlegal team for their expertise, practical cases and insightful discussion, as well as all participants for their active engagement and interest in the topic.

Joint events of the EBA Odesa Legal and Finance-Tax Committees will continue to serve as a platform for discussing current issues that directly affect business operations.