Ukrainian resident entrepreneurs who hold interests in foreign companies will face the year of 2026 as a key one in terms of their controlled foreign company (CFC) reporting. The Tax Service of Ukraine has intensified its efforts to cover this gap so that much more is at stake for potential violators as many experts report that this year should be the first one for the tax service to start its inspections factually and seriously.
The State Tax Service has officially reported that, as of 30 April 2025, more than 60% of legal entities and individuals have not filed their CFC reports for the previous period – a clear indication of the scale of the problem and the attention paid by regulatory authorities. Let's see how to act correctly and avoid significant financial losses.
Key Deadlines to File CFC Report in 2026
The reporting period is the calendar year of 2025. The deadline depends on a type of the controller:
- For resident individuals, it is until 1 May 2026. The report is expected to be filed electronically along with the annual asset and income declaration.
- For resident legal entities (Ukrainian companies), it is until 2 March 2026. The report must be filed together with the profit tax return.
May the filing be postponed? Individuals may apply to the State Tax Service for postponing the deadline for a good reason (such as illness, for example). Legal entities do not have this option as it is a hard-set deadline for them.
Key Changes and Controversies for 2026
In field 31, the list of low-tax jurisdictions is reduced. This is the most essential change. For 2025 reports, the list of countries, transactions with whose residents must be reported in field 31, has been shortened considerably. To be more specific, Cyprus, Ireland, Liechtenstein, and Hong Kong are no longer on the list. However, such “classic” offshore jurisdictions, as the British Virgin Islands, Barbados, Panama, and the Seychelles, still remain among the listed ones so far.
What must be reported? Field 31 is for transactions made with non-residents who are on the new shortened list of jurisdictions. Field 32 is for transactions made with related parties, including Ukrainian companies and individuals (including the controllers). Field 33 is for transactions with non-residents incorporated in certain legal forms.
Fields 31 to 33 are mandatory even for “preferential” CFCs. Previously, it was a matter of practice not to fill out these fields if profits earned by CFCs were exempt from taxation in Ukraine (for example, due to a low level of income). Starting from April 2024, the State Tax Service has clearly stated its position: fields 31 to 33 must be filled in anyway, whether there is taxable profit or not. They are now needed for administration purposes.
Reporting the loss of the controller status. If you sold or liquidated your CFC in mid-2025, this does not release you from the obligation to report for that year. The report must be filed as “final” one. If there is no prospect of obtaining financial statements from the new owners, the law allows you to file a short form report.
Penalties: What to Expect for?
Liability for violating the CFC rules is strict and no exemption is applied during wartime (though it may be postponed only if certain conditions are met). Fines for filing untimely or failing to file the report can reach UAH 3,028,000. In addition to the fines, there is a risk of additional taxes assessed on the CFC’s undistributed profits and default interest charged in addition.
Step-by-Step Plan: How to Avoid Fines
- Identifying Your Status. You are a controller if you hold an interest in a foreign company (either directly or indirectly) of more than 10%, provided that the aggregate share held in such company by Ukrainian residents exceeds 50%. Actual control (e.g., through account management) does matter here as well.
- Gathering Documents. It will be necessary to have a duly certified copy of CFC's financial statements for 2025. If such statements are filed abroad later than in Ukraine, it can be attached to the report for 2026.
- Filling in fields 31 to 33 carefully. Do not leave them blank even if the CFC is loss-making. Describe each transaction (for example, consulting services, sale of goods, etc.) and give full details of the counterparty. Transaction amounts are not required.
- Filing the report in a timely manner. Use a qualified electronic signature and special software distributed by the State Tax Service.
- Consulting with professionals. The best way to contribute to your peace of mind and business security is to consult with an international tax specialist, given the complexity of the rules, risk of errors, and high fines.
Takeaways
You must pay more attention to your CFC reporting for 2026. The key to success is to understand the new rules, gather documents carefully, and meet the deadlines. Don't take risks but delegate complex tax issues to professional experts, such as field-oriented lawyers and auditors, who will help build a transparent and secure cross-border structure for your business. And if you are just planning to enter the international market, having professional support will guide you through the registration of your LLC or other foreign entity.
