Report on CFC: filing and Penalties for Residents

In 2025, tax authorities continue to accept reports on Controlled Foreign Companies (CFCs).

Residents who own businesses abroad are required to report on the activities of their companies. Failure to file such a report or the presence of errors in it may result in significant penalties.

What is a CFC, and how is its activity monitored by the tax authorities?

A CFC, or Controlled Foreign Company, is any legal entity, such as a commercial holding, trust, foundation, partnership, etc., registered abroad. Its co-owner (controller) is a Ukrainian resident who may own more than 10% or 50% of the company. A controller can be either an individual or a legal entity.

According to Order No. 254, a business opened abroad and controlled by a Ukrainian resident is subject to taxation in Ukraine. Therefore, when registering a CFC, the resident must submit the following to the tax authority:

• information about being a co-owner of a foreign company: the person must notify the tax authority within 60 days from the date the CFC was established. This can be done in person at the State Tax Service or through the electronic cabinet;

• notify the tax authority about the termination of the company's activities or about ceasing participation in the CFC. This can be done in the same ways — in person at the STS or via the e-cabinet;

• annual report on CFC activities: this document must be submitted along with the annual personal income and asset declaration.

Deadlines for filing the report in 2025

In 2025, the deadlines for filing the CFC report along with the asset declaration remain unchanged:

• for individuals — until May 1, 2025 (along with the personal income and asset declaration for 2024);

• for legal entities — until March 1, 2025 (if the fiscal year coincides with the calendar year and ends on December 31, 2024); the annual income tax return is submitted simultaneously.

Can the reporting deadline be extended?

According to legislation, an entrepreneur may submit an annual declaration after the official deadline, and this rule also applies to the CFC report — but only for individuals.

The extended deadline is:

• For individuals — until December 31, 2025, but only if there is a valid reason;

There is no extension for legal entities — only the fixed date applies to them.

Penalties for failing to report a CFC

If an entrepreneur misses the reporting deadline or does not submit it at all, the following penalties may be imposed:

• UAH 25,500 — for failure to submit the CFC report (for able-bodied individuals — up to 100 times the subsistence minimum set on January 1, 2025, currently UAH 2,550); the fine for submitting a report with errors depends on the nature of the violations and may be lower.

• UAH 638,250 — for failure to provide CFC information upon the tax authority's request within one month (25,530 subsistence minimums as of early 2025, currently unchanged).

• 3% of the CFC’s income or 25% of the adjusted profit — for failure to timely notify the tax authority about participation in or loss of control over a CFC, as well as other violations.

During martial law, the application of penalties for late reporting of CFCs was suspended. However, the penalties have not been canceled, only postponed until the end of hostilities.

How to prepare for report submission?

The report must reflect information about the company’s activities, including its financial performance and structure.

First, prepare the following data:

• total annual income of the company,

• net profit or loss,

• adjusted pre-tax profit,

• financial distribution within the company.

Attach the following documents to the financial report:

• certificate of registration,

• ownership statement confirming the share in the company,

• charter and other incorporation documents,

• shareholders' meeting minutes,

• trust declarations.

How to file a CFC report?

To properly submit the CFC report, follow these steps:

1. Register in the Taxpayer’s E-cabinet.

• obtain a QES (qualified electronic signature) from an accredited certification center;

• log in using your QES;

• find the CFC report submission form.

2. Fill out the form.

The electronic form includes several key sections:

• controller’s information,

• company structure,

• registration data,

• financial information.

Attach financial statements and audit documents to the last section.

3. Submit the report.

• verify the information provided;

• sign it is using QES;

• send the completed form via the STS electronic service for review.

A notification will appear in your personal cabinet confirming receipt and processing of the document.

If you find an error after submission, correct it by submitting an amended report using the same form and updated information.

4. Report confirmation.

Once processed, the tax authority must send a receipt confirming acceptance of the report.

If the report is rejected due to incorrect data, contact a tax service consultant to clarify what needs to be corrected.

Additional penalties from the tax authority

According to Article 49 of the Tax Code of Ukraine, various penalties apply depending on the type and nature of the violation:

• missing the reporting deadline — UAH 127,500;

• incomplete or inaccurate report — UAH 25,500 (if there is no proven intent), 3% of undeclared income of the foreign entity (in case of deliberate concealment).

The tax authority may impose additional penalties if it determines that violations were committed intentionally.

How to appeal a fine?

An entrepreneur may appeal a fine by submitting an objection to the tax authority or the court. This must be done within 10 working days after the STS notifies about the fine.

How can a resident avoid penalties?

To avoid tax penalties, file your CFC reports on time, verify the accuracy of the information provided, and keep all documents confirming submission.