In 2022, Ukraine joined the Common Reporting Standard (CRS) agreement, requiring the country to establish procedures for implementing the reporting standard and defining the forms that financial institutions must submit to tax authorities. However, there is still no definitive list of the information that Ukrainian banks will be required to provide to the tax authorities. Our team decided to analyze this issue in detail because being informed means being prepared!
How does CRS work?
The CRS process involves the following steps: financial institutions collect data on non-resident clients’ financial records and submit the gathered data to the local tax authority, which in turn forwards the information to the relevant foreign tax authorities in the jurisdictions where the clients are tax residents—provided that both countries participate in the CRS agreement.
The CRS framework is expected to combat tax evasion effectively. Additionally, it strengthens tax authorities’ ability to monitor and impose taxes on income derived from controlled foreign companies (CFCs). If you fail to declare foreign assets in Ukraine or understate their value, the tax office will become aware of it and may impose additional tax liabilities.
Legal framework for CRS in Ukraine
In March 2023, the Verkhovna Rada of Ukraine passed Law No. 2970-IX, which introduced the international standard for the automatic exchange of financial information. In April 2023, the President of Ukraine signed the law, officially taking effect on April 28. This law amends the Ukrainian Tax Code to regulate CRS-related matters. However, no additional specialized legislation has been adopted yet. Furthermore, the procedures for implementing the reporting standard and due diligence requirements for financial records remain undefined, and the official reporting forms that financial institutions must submit to tax authorities have yet to be approved.
What financial data Is collected under CRS?
Tax authorities require the following information under the CRS framework.
- name
- address
- date of birth
- tax residency, etc.
- account number
- bank details
- account balance and the total value of incoming and outgoing transactions for the reporting period
- currency of all credited and debited transactions
- additional data depending on the specific case
What happens if I fail to provide the Required Information?
The CRS framework includes several penalties for non-compliance.
- Financial institutions may refuse to provide services or terminate the account.
- The tax authority may conduct an unscheduled audit of your activities in Ukraine and impose fines.
- If you are a non-resident business owner in Ukraine, you may be required to disclose information about your ultimate beneficial owner.
- Failure to provide beneficial ownership details may result in financial penalties.
There’s no room for complacency. Under CRS regulations, financial institutions have already begun reviewing customer accounts.
Individuals with assets exceeding $1 million will be reviewed by December 31, 2023, and those with assets below $1 million by December 31, 2024.
Who falls under CRS in Ukraine?
The following financial institutions must conduct compliance checks: banks, insurance companies, and investment firms.
Which accounts are subject to CRS audits?
Corporate accounts with a balance exceeding $250,000 as of June 30, 2023, must be reviewed by December 31, 2024. The first report on such accounts will be submitted in 2025. Corporate accounts with a balance below $250,000 will only be reviewed once they exceed this threshold. Individual accounts are subject to review regardless of the balance. Entrepreneurs (sole proprietors) who hold funds in personal accounts without declaring them should take note. CRS reporting applies to all financial records held by non-residents in the country where the financial institution operates.
Automatic exchange of information with Wise and Revolut
Wise states on its website that it complies with CRS requirements and may disclose financial details, including income and account balances. Revolut, as an online bank, is also obligated to report financial data under CRS. Paysera and similar services fall under the CRS definition of financial institutions required to report relevant accounts. However, we currently lack confirmation on whether they actively provide such reports.
What should entrepreneurs do about CRS?
Currently, CRS regulations in Ukraine mainly affect individuals and companies with accounts in foreign banks, as these institutions already have the necessary procedures for compliance and information exchange. If you hold an account in a foreign bank—even with a balance as low as one dollar—you should be prepared for an assessment of your compliance status. When a financial institution begins reviewing your account under CRS regulations, you will be notified, typically when asked to complete a Self-Certification Form.
What is a Self-Certification Form under CRS?
A Self-Certification Form is a standard questionnaire that may include the account holder’s full name, current residential address, mailing address, date and place of birth, type of entity (for corporate accounts), country/jurisdiction of tax residency, and Taxpayer Identification Number (TIN) or equivalent.
Based on this form, the financial institution determines whether an account qualifies as reportable under CRS. The moment an account is classified as reportable is crucial, as it determines the reporting period.
For example, an account was opened on May 28, 2021, but identified as a Reportable Account on December 3, 2024. Since the account was classified as reportable in 2024, the financial institution will include it in its 2025 report covering the entire 2024 calendar year and continue reporting annually.
Penalties for providing false information under CRS
The Ukrainian Tax Code imposes penalties for deliberately providing false information in the Self-Certification Form, whether for oneself or for controlling persons. Misrepresenting information to avoid account classification under CRS may result in a fine of 100 minimum wages, amounting to 670,000 UAH as of 2024.
To avoid penalties, you must correctly declare your tax residency status and notify financial institutions of any changes within 30 calendar days.
Our team is ready to assist you with CRS in Ukraine and provide expert advice on income declaration for sole proprietors. We are available Monday to Friday from 9:00 AM to 7:00 PM. To receive a consultation, send your request through the form below or message us on Telegram, Viber, or WhatsApp.
