Tax Authority Access to Bank Accounts: What Data It Receives and How Sole Proprietors Should Respond

The State Tax Service of Ukraine (STS) receives banking information through notices, requests, international exchange, and court orders specified by law. Each mechanism has its own legal grounds and limits. Ukrainian law does not give the tax authority unlimited, real-time access to every transaction made by every citizen. An individual entrepreneur (FOP) should keep bank statements together with documents explaining incoming payments and regularly reconcile them with their records.

If the STS requests documents directly from you, check the sender, delivery method, legal grounds, list of transactions, and period covered. As a general rule, you must respond within 15 business days beginning the day after you receive the request; the deadline for a tax cross-check is 10 business days. Prepare explanations with supporting documents within the scope of the lawful request, and keep proof of submission.

What account information is protected by banking secrecy

Under Article 60 of Ukraine’s Law “On Banks and Banking”, banking secrecy includes, in particular, information about client accounts, account transactions, legal transactions entered into, and financial standing. A bank must protect this information and may disclose it only on the grounds and to the extent set out by law.

To assess the STS’s authority, distinguish between information that an account exists, its opening or closing, its balance, and specific credits and debits. The right to receive one type of information does not mean the right to obtain the client’s full set of banking data.

Article 62 of this Law provides for disclosure by court order, at the client’s request or with the client’s written consent, as well as certain cases in which data may be provided to government bodies without a court order. The specific legal grounds must therefore be established for each request.

How the STS obtains bank data: mechanisms and documents

The main rules are set out in subparagraphs 20.1.5 and 20.1.50, and Articles 39-3, 69, and 73 of the Tax Code of Ukraine, as well as paragraph 4 of part one of Article 62 of the Law on Banks. The table shows the limits of these mechanisms and practical recommendations for preparing documents.

What the bank reports when a FOP opens an account

Under paragraph 69.2 of the Tax Code, the relevant financial institution sends notice of the opening or closing of an account or e-wallet belonging to a legal entity or self-employed individual on the day it is opened or closed. This provision identifies a specific group of taxpayers and does not establish a general notice mechanism for accounts belonging to all citizens.

FOPs and individuals carrying out independent professional activities must notify the institution where they open an account or e-wallet of their status. This is required by paragraph 69.7. In practice, it is advisable to check that the bank has recorded this status in your information.

Paragraphs 69.3–69.4 set out the general procedure for registering accounts for tax purposes and starting debit transactions, including by implied consent.

Separately, Article 62 of Ukraine’s Law “On Banks and Banking” provides for the STS to receive information about identified cases in which an individual or legal entity resident in Ukraine owns an interest in a foreign legal entity, in accordance with Article 39-2 of the Tax Code of Ukraine. If you own such an interest, we recommend keeping documents showing its acquisition, size, and any changes.

When the STS needs a court order

Subparagraph 20.1.5 of the Tax Code provides for obtaining, by court order, information about the volume and turnover of funds in accounts. Paragraph 73.4 also requires a court order to obtain information from financial institutions about the presence and movement of funds where the scope of information exceeds that provided for in paragraph 73.3.

However, paragraph 73.4 expressly includes exceptions for specified requests made as part of international exchange. Article 62 of the Law on Banks also provides separate grounds for obtaining information without a court order, including information about foreign currency settlements and e-residents. The special provision concerning an electronic resident (e-resident) applies specifically to that legal status; using an electronic taxpayer account or banking app does not confer it.

Under paragraphs 5 and 9 of Chapter 3 of NBU Rules No. 267, a bank discloses data under a court order to the extent specified in the order, and on request from an authorized body to the extent that the Law on Banks allows for that body. The fact that the rules include a technical form with detailed transaction fields does not expand the STS’s authority.

What international exchange of account data means

The Common Reporting Standard for Automatic Exchange of Financial Account Information (CRS) provides for identifying reportable accounts and exchanging information between the competent authorities of jurisdictions under the relevant international arrangements. A separate agreement implements the United States Foreign Account Tax Compliance Act (FATCA), with its own criteria and data scope.

Under subparagraphs 39-3.4.1–39-3.4.3 of the Tax Code, financial agents submit an annual report on reportable accounts to the STS before 1 July. The reporting period is the previous calendar year unless the relevant agreement sets different rules. Exchange takes place under international agreements; it does not provide continuous review of every client payment.

Through CRS, the STS may receive information about reportable foreign financial accounts held by Ukrainian tax residents within the scope of active exchange relationships. Citizenship alone does not determine tax residency, and information exchange does not mean that tax is automatically assessed on all foreign assets. For financial agents subject to Article 39-3 of the Tax Code of Ukraine, subparagraph 39-3.2.2.1 sets a special rule: if an agent has reason to believe that a person is simultaneously a resident of Ukraine and at least one other jurisdiction, the agent treats that person as a resident of the relevant other jurisdiction for CRS purposes.

If this applies to you, list every jurisdiction in which you are tax resident in the information you provide to the financial agent and submit documents supporting it. Under paragraph 39-3.10, a report on reportable accounts is not the account holder’s tax return.

If you have a foreign account, we recommend keeping statements and documents explaining the source of funds, and checking the tax residency information you gave the financial institution. The deadlines for notifying a foreign institution of changes and responding to its requests are determined by the rules applicable to that institution. Ukrainian requirements apply to financial agents covered by Article 39-3 of the Tax Code of Ukraine: under subparagraph 39-3.2.2.1, an account holder must report a change in their tax residency status for CRS, FATCA status, or relevant controlling-person status within 30 calendar days.

If the financial agent suspects that an account is reportable despite the documents provided by its holder, subparagraph 39-3.2.2.3 requires the account holder to provide explanations and information within 30 calendar days of receiving the request. If the suspicion concerns incomplete or inaccurate information that caused an account to be omitted from a previously submitted report, subparagraph 39-3.2.2.5 requires a response by the deadline set by the agent, but no later than 90 calendar days after receiving the request.

Check which specific grounds your request cites. In the circumstances set out in subparagraph 39-3.2.2.4, failure to provide documents, report a change of status, respond within 30 calendar days, or rebut the suspicion that an account is reportable may be grounds for refusing service or terminating the agreement.

How to prepare documents for incoming payments

A bank statement shows the movement of funds. To explain the nature of a transaction and correctly determine its tax implications, match the statement against the agreement, documents showing performance of obligations, and your own records. Rules on access to bank data do not, by themselves, determine which incoming payments are included in taxable income.

We recommend preparing a working table each month with the date, amount, payer, payment purpose, transaction details, supporting document, and accounting entry. Flag incoming payments that lack supporting documents and request the documents from the counterparty promptly.

Illustrative reconciliation example. During one month, the account received UAH 120,000: UAH 80,000 from customers, UAH 25,000 under a loan agreement, and UAH 15,000 from another account belonging to the same person. Total: 80,000 + 25,000 + 15,000 = 120,000. To explain the payments, the entrepreneur prepares three groups of documents: sales, the loan, and the transfer. This breakdown explains the source of the incoming payments; the final taxable income is determined under the rules of the entrepreneur’s tax system and the confirmed circumstances.

For a transfer between your own accounts, it is important to have statements from both accounts. The same amount and close dates may not be enough: the documents should make it possible to identify the sender, recipient, and source of the funds. If an incoming payment remains unexplained, first establish what it was for and then determine how to record it.

How to respond to an STS request for statements and incoming payments

Under paragraph 73.3 of the Tax Code, the STS may request information and documents directly from the taxpayer. The requirement for a court order to obtain certain data from a bank does not exempt an entrepreneur from responding to a properly issued, lawful request addressed to them.

1. Record receipt and check the document

Keep the request, envelope and postal records or the electronic document, together with proof of delivery. Check the authority’s name, reference number, date, and signatory. The request must be signed by the head, deputy head, or an authorized person of the supervisory authority.

Under paragraph 73.3, the request must state the grounds for sending it and the information supporting those grounds, list the requested information and documents, and bear the seal of the supervisory authority. Under subparagraph 73.3.2, proper delivery of a request is determined under Article 42 of the Code. Establish the delivery date before calculating the response deadline. Under paragraph 42.4, electronic correspondence between the STS and an entrepreneur through the electronic taxpayer account requires the entrepreneur to have filed an application electing to receive documents this way.

The delivery date is determined from the receipt confirming delivery of a properly issued document available in the account. If delivery takes place after 6 p.m., the delivery date is the next business day; if it takes place on a weekend or public holiday, it is the first business day after that. Under paragraph 42.5, if the post does not deliver the document because the addressee is absent, refuses to accept it, or for another reason specified in this provision, the document is deemed delivered on the date recorded by the post in its notice, together with the reason for non-delivery.

Therefore, check the delivery receipt or postal notice to calculate the deadline, even if you read the request later. Take into account the exception in paragraph 42.3: if you notified the STS in time of a change of tax address under Article 66, you are released from complying with documents the STS sent to the former address during the period between state registration of the change and updating your taxpayer records, if those documents were later returned because the addressee was absent.

If this applies to you, keep proof that you notified the STS of the address change and that the document was returned.

2. Identify the grounds and scope of the request

For example, if the STS cites item 1 of subparagraph 73.3.1, the request must state facts that, based on an analysis of tax information lawfully obtained, may indicate a violation. Other grounds may include inaccurate information in a tax return, a tax cross-check, or international information procedures provided for by the Code.

List separately the accounts, transactions, and period covered by the questions. Under subparagraph 73.3.6, the STS does not disclose the contents of a foreign request in its request to a taxpayer or other person if the foreign competent authority has asked that the taxpayer not be told that it made the request. In that case, the Ukrainian authority states the grounds as item 8 of subparagraph 73.3.1.

3. Calculate the response deadline

• As a general rule, under subparagraph 73.3.3, you must respond within 15 business days beginning the day after you receive the request, unless the Code provides otherwise.
• For a tax cross-check, you must respond within 10 business days beginning the day after you receive the request.
• For requests under special provisions, check the deadline that applies to that procedure.

We recommend noting the final day immediately and setting an internal preparation deadline earlier. Do not assume that a request for clarification or advice automatically extends the response period.

4. Prepare explanations and relevant documents

Structure your response in the order of the STS’s questions. For each transaction, state the date, amount, nature, and supporting document. Attach the statement for the relevant period, necessary agreements and payment documents, and a numbered list of attachments to your letter. Certify paper copies with your signature and, if you have one, your seal, in accordance with subparagraph 20.1.2 of the Tax Code of Ukraine. This structure makes it easier to match your explanation to a specific movement of funds.

Provide documents within the scope of the lawful subject of the request. If the request calls for a statement covering the entire specified period and that requirement has a legal basis, an arbitrary selection of individual incoming payments may not be a complete response.

If you have already provided the information and supporting documents in response to an earlier request from the same authority, subparagraph 73.3.4 allows you to state the date and reference number of your earlier letter. You do not need to resubmit the information covered by it. For clarity, we recommend naming the documents you are referring to.

5. Keep proof of submission

Keep the final version of your response with all attachments. Depending on how you submit it, keep electronic confirmations, postal documents with an inventory of contents and delivery details, or a copy bearing a receipt stamp. These records can help confirm when you responded and what you submitted.

What to do if the request has defects

Subparagraph 73.3.4 releases a taxpayer from the duty to respond if the request was prepared in breach of the requirements in paragraphs one through five of paragraph 73.3. To rely on this provision, identify the specific defect and its legal significance.

In practice, it is advisable to state your objections in writing and cite the relevant legal requirement. If the request contains several separate questions or cites a special ground, assess each one. A lawful request must be answered within the prescribed deadline.

Why a bank’s request about the source of funds needs a separate response

A bank checks its client and the client’s transactions under financial monitoring laws. Under Article 11 of Law No. 361-IX, the scope of the check depends, among other things, on the client’s risk, the purpose of the relationship, the amount, and the frequency of transactions. The bank may request necessary documents, and the client must provide them.

Article 20 of this Law sets a general threshold of UAH 400,000 for threshold financial transactions if at least one of the characteristics specified there is present. At the same time, Article 11 also requires checks where there is suspicion or doubt about the accuracy of data. A lower amount therefore does not guarantee that the bank will not ask questions, and the number of transactions does not create a universal exemption from review.

When a bank requests an explanation, clarify which transactions and documents it needs, then provide a consistent explanation of the source and purpose of the funds. This procedure has its own legal grounds and does not give the STS unlimited access to an account.

When to request tax advice and how to protect your rights

If you regularly deposit your own funds, transfer them between accounts, or receive refunds and cannot clearly determine the tax implications, you can request an individual tax consultation (ITC). Under Article 52 of the Tax Code, it is individual and may be relied on by the taxpayer to whom it was issued.

In your application, include your identification and contact details, tax address, the facts, your practical need for the consultation, the date, and a valid signature. Describe your tax system, the source of funds, the sequence of transfers, and the documents available. Ask a specific question about applying the tax provision to those circumstances. The general deadline for providing an ITC is 25 calendar days after the day the application is received; an authorized person may extend it by no more than 15 calendar days, with advance written notice.

Article 53 provides for the possibility of appealing an ITC issued in paper or electronic form in court. It also expressly states that following a consultation does not release a taxpayer from paying a tax liability determined under the Code.

The right to appeal decisions, actions, and omissions of supervisory authorities, and the right to keep protected information confidential, are set out in Article 17. If the STS has made a decision you believe is unlawful, identify the proper way to appeal it. As a general rule under Article 56, a complaint to a higher-level supervisory authority must be filed within 10 business days beginning the day after you receive the decision.

If the supervisory authority has assessed a monetary obligation for reasons unrelated to a breach of tax law, paragraph 56.12 provides 30 calendar days beginning the day after you receive the relevant tax notice-decision. When filing a complaint, you must also notify the authority whose decision is being appealed.

An appeal against an STS decision and an appeal against a court order to disclose banking secrecy follow different procedures. Filing a complaint with the tax authority does not cancel a court order. If the dispute concerns the scope of data disclosure, give a lawyer the request, order, proof of delivery, and list of requested information so they can determine the proper procedure for protecting your rights.

Official sources for handling bank requests

• Ukraine’s Law “On Banks and Banking” No. 2121-III: Articles 60–62 — what constitutes banking secrecy, the duty to protect it, and grounds for disclosure.
• Tax Code of Ukraine No. 2755-VI: Article 17; subparagraphs 20.1.5 and 20.1.50; Articles 39-3, 52–53, 56, 69, and 73 — STS powers, international reporting, consultations, appeals, account notices, and information requests.
• NBU Board Resolution No. 267, “On Approval of the Rules for the Storage, Protection, Use, and Disclosure of Banking Secrecy”: Chapter 3, including paragraphs 5–14 and 18 — requirements for requests and limits on information banks may provide.
• Ukraine’s Law No. 361-IX on preventing and countering the legalization of proceeds: Articles 11 and 20 — customer due diligence and threshold financial transactions.