CRS in Ukraine: International Tax Transparency Is Now a Reality

The automatic exchange of financial account information under the Common Reporting Standard, or CRS, is becoming an increasingly important consideration for Ukrainian individuals and businesses with assets abroad.

Ukraine completed its first international CRS exchange in September 2024. According to the Ministry of Finance, the State Tax Service received information from approximately 50 foreign jurisdictions and transmitted information to 51 jurisdictions. The authorities are now analysing account balances and amounts credited to foreign financial accounts and comparing this information with the tax declarations of identified Ukrainian residents.

This represents an important change in the practical tax environment.

Foreign bank and investment accounts remain confidential from the public, but they are becoming increasingly transparent to tax authorities. CRS information may include details identifying the account holder, the financial institution, the account balance and certain categories of income or gross proceeds.

The scope of CRS may extend beyond personal bank accounts. Depending on the classification of a foreign company, trust, fund or other structure, information concerning its controlling persons or ultimate beneficial owners may also be reportable to the jurisdiction in which those individuals are tax resident.

Switzerland is particularly relevant in this context. The reciprocal CRS relationship between Switzerland and Ukraine entered into force on 1 January 2025. Under the Swiss framework, financial institutions collect relevant information from the date of activation and the competent authorities exchange it in the following year. This means that information relating to the 2025 reporting period may enter the exchange process during 2026.

For taxpayers, the principal risk is not simply the existence of an overseas account. The more significant issues may arise from inconsistencies between CRS data and previously submitted tax returns, an incorrect determination of tax residency, undeclared investment income, incomplete controlled foreign company reporting, or the absence of documents confirming the acquisition cost of financial assets.

CRS data should also be interpreted carefully. For example, the gross proceeds reported in connection with the sale of an investment may be substantially higher than the taxable profit. Without appropriate supporting documentation, explaining the difference to the tax authorities may become significantly more difficult.

The appropriate response is therefore not to wait for a formal inquiry.

Individuals and businesses with foreign accounts, investment portfolios or international corporate structures should consider conducting a structured review of:

• their current and historical tax residency; • foreign financial accounts and investment activity; • declared income and previously filed tax returns; • controlled foreign company reporting obligations; and • documentation supporting the source of funds and acquisition cost of assets.

At Aksio Partners, we assist clients and their advisers with the structured review of international assets, preparation of financial chronologies, identification of documentary gaps and coordination of complex cross-border tax and legal work.

As international tax transparency continues to develop, early preparation remains considerably more effective than responding to questions after information has already reached the tax authorities.

Tags: #CRS #TaxTransparency #InternationalTax #Ukraine #TaxCompliance #ForeignAccounts #CFC #CrossBorderBusiness #WealthStructuring #RiskManagement