Ukraine's tax administration has introduced expanded reporting obligations that directly affect foreign entities with commercial ties to the country. The changes entered into force in early 2025 and apply to income earned from Ukrainian sources during the current fiscal year. Foreign companies that miss the new filing deadlines risk penalties, suspension of tax treaty benefits, and automatic escalation of withholding tax obligations.
Ukraine's updated tax legislation now requires foreign legal entities receiving Ukrainian-source income to file enhanced informational returns with the Державна податкова служба України (State Tax Service of Ukraine). The new rules apply to entities whose cumulative Ukrainian-source receipts exceed prescribed thresholds within a calendar year. Compliance deadlines fall within 60 days after the close of each reporting quarter.
This alert outlines who is affected, what the threshold criteria are, and the immediate steps international companies should take to stay compliant.
What has changed and when it takes effect
Ukraine's tax legislation now imposes two distinct layers of obligation on foreign entities. The first layer concerns corporate income tax reporting. Foreign companies deriving profits from Ukrainian operations must now submit a standalone income declaration – separate from any withholding tax return previously filed by their Ukrainian paying agents.
The second layer targets withholding tax transparency. Ukrainian payers have historically remitted withholding tax on behalf of foreign recipients. Under the new rules, the foreign recipient itself must file a confirmatory return demonstrating its tax residency status and the applicability of any relevant tax treaty. Failure to file this return means the Ukrainian payer must apply the standard domestic withholding rate rather than the reduced treaty rate.
Both sets of obligations apply to income earned from 1 January 2025 onward. The State Tax Service has confirmed that the first reporting deadline under the new regime falls 60 days after the close of Q1 2025. Subsequent quarterly deadlines follow the same pattern throughout the year.
Practitioners advising clients on tax matters in Ukraine note that the State Tax Service has already begun issuing compliance notices to known foreign recipients. Entities that have not yet received a notice should not assume they are outside scope.
Which foreign entities are affected
The new requirements apply broadly. Any foreign legal entity that meets one or more of the following conditions falls within scope.
- Receipt of dividends, royalties, interest, or service fees from a Ukrainian-resident payer during 2025.
- Operation of a permanent establishment in Ukraine – whether registered or unregistered – that generates attributable profits.
- Provision of digital or consulting services to Ukrainian clients above the prescribed annual threshold.
- Holding of Ukrainian real estate or participation interests in Ukrainian legal entities.
- Receipt of proceeds from the disposal of Ukrainian-situs assets.
The permanent establishment question carries particular weight. Ukraine's tax legislation applies a broad definition of permanent establishment. A foreign entity directing projects in Ukraine through local representatives – even without a formal branch – may be treated as having a taxable presence. This has been a consistent position of Ukrainian courts and the State Tax Service.
Tax residency certification is now a prerequisite for treaty relief. A foreign entity relying on a tax treaty to reduce its Ukrainian withholding tax burden must submit a valid certificate of tax residency issued by its home jurisdiction's competent authority. The certificate must relate to the year in which the income is received. Certificates covering prior years are no longer accepted as sufficient proof.
For international groups with Ukrainian subsidiaries, the combined effect of the corporate income tax and withholding tax rules creates a dual compliance obligation. The subsidiary must file as a Ukrainian-resident payer, and the foreign parent must file as a non-resident recipient. Both filings must be consistent. Discrepancies between the two returns trigger automatic audit flags.
To receive an expert assessment of your entity's filing position in Ukraine, contact us at info@ferrazwhitmore.com.
Immediate action items for international companies
The compliance window is short. International companies with Ukrainian-source income should address the following items without delay.
Confirm scope exposure. Map all Ukrainian-source payment flows received since 1 January 2025. Include dividends, interest, royalties, management fees, and any proceeds from asset disposals. Identify the Ukrainian payer for each flow and confirm whether withholding tax was deducted at the standard or treaty rate.
Obtain or renew tax residency certificates. If your entity relies on a tax treaty to reduce withholding tax, obtain a 2025-year residency certificate from your home tax authority now. Processing times vary by jurisdiction – in several European countries they range from two to six weeks. Do not wait until the quarterly deadline approaches.
Assess permanent establishment exposure. Review whether any employees, agents, or project-based activities in Ukraine could give rise to a permanent establishment. Under Ukraine's tax legislation, even a construction project lasting more than 12 months may be treated as a taxable presence. If exposure exists, specialist advice on regularisation is advisable before the first filing deadline.
Align group filings. Coordinate between the Ukrainian subsidiary's withholding tax returns and the foreign parent's confirmatory filings. Inconsistencies in the reported amounts or the claimed treaty rates will generate audit enquiries. A single point of oversight across both filings reduces this risk materially.
Review intercompany contracts. Several intercompany arrangements that were compliant under the prior regime now require supplemental documentation. Contracts that do not specify the nature of the services or the basis for fee calculations will be scrutinised under the expanded transfer pricing and source-of-income rules embedded in the new tax legislation. For groups also assessing their Ukrainian corporate structure, our overview of corporate law in Ukraine sets out the relevant structural considerations.
For context on how similar reporting changes have been implemented across other CIS jurisdictions, see our related alert on tax reporting developments in Russia.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our tax law practice covers cross-border income structuring, withholding tax compliance, tax treaty applications, and permanent establishment analysis in Ukraine and across CIS markets. We work with international investors, multinational groups, and in-house legal teams who need results-oriented counsel on corporate income tax and related regulatory matters in high-growth and emerging markets. As an international law firm advising on Ukraine matters, we provide direct support for entities engaging a lawyer in Ukraine for the first time under the new regime. To discuss your entity's compliance position, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.