Since July 1, 2023, Ukraine has been a member of the international automatic exchange of information regarding financial accounts pursuant to the Common Reporting Standard (CRS). The international exchange of information includes 123 countries (as of May 2024).
In accordance with the CRS, financial institutions of the participating countries are obliged to carry out due diligence of financial accounts to identify account owners who are tax residents of other partner jurisdictions ("Reportable Persons"), for the purpose of the information exchange.
Financial accounts held by Reportable Persons are reportable accounts for the purposes of the CRS ("Reportable Accounts"). These include:
- Deposit accounts
- Custodial Accounts
- Equity and debt interests in certain investment companies
- Insurance contracts with redemption amount
- Annuity agreements
Financial institutions are responsible for submitting information about Reportable Accounts to their national competent authority, which will in turn send the information to the jurisdictions where the owners of the Reportable Accounts are resident.
In accordance with the CRS, such information for individual Reportable Persons includes name, address, individual tax number, and date and place of birth of each Reportable Person owning the Reportable Account. In cases where a legal entity owns the Reportable Account, the information to be disclosed includes the name, address and tax number of the entity and the name, address, individual tax number, and date and place of birth of each Reportable Person controlling the account. The information to be provided also includes the balance or value of the Reporting Account at the end of the relevant reporting period or, if the account was closed during the reporting period, as of the date of its closing.
In addition, the following information is to be provided:
- Deposit Accounts: the interest paid or credited;
- Custodial Accounts: the interest paid or credited, dividends, other income and gross receipts.
In September 2024, Ukraine will transfer to the participating countries the information about the Reportable Accounts of non-residents opened in Ukraine since 30.06.2023. In return, it will receive information regarding Ukrainians’ accounts abroad during the full year 2023.
Ukraine’s first automatic exchange, which will take place in 2024, will cover:
- Reportable Accounts of non-resident individuals and legal entities opened after 01.07.2023
- Reportable Accounts of foreign individuals opened before 30.06.2023, which have a balance of more than US$1 million.
In 2025, Ukraine will transfer data in relation to:
- Reportable Accounts of foreign legal entities opened before 30.06.2023, which has a balance exceeding US$250,000
- Reportable Accounts of individuals opened before 30.06.2023, which have a balance which does not exceed US$1 million.
Ukraine will need to send out its reports on the Reportable Accounts for 2023 so that the other countries receive them by September 30, 2024.
It should be noted that the above criteria for the Reportable Accounts, which will be subject to automatic exchange in 2024 and 2025, apply only to Ukraine. They do not apply to the reports that will be provided by other countries to Ukraine, which are governed by the participating countries’ domestic laws related to the CRS.
By Igor Davydenko, Partner, Roman Mehedynyuk, Senior Associate, and Valeria Tarasenko, Tax Consultant, Dentons
