Effective tax structuring in Ukraine requires coordinating national rules with an increasingly assertive international anti-avoidance framework, while managing the procedural realities of the State Tax Service of Ukraine and the Ukrainian court system. For international investors and corporate groups, the risks of an unstructured approach range from unexpected withholding tax exposure on cross-border payments to transfer pricing assessments and mandatory disclosure obligations under EU-aligned reporting regimes. Ferraz & Whitmore advises on the design, review and ongoing management of tax structures across holdings, financing arrangements, IP ownership and exit transactions in Ukraine.
When Businesses Need Specialised Tax Structuring Advice in Ukraine
Tax structuring considerations in Ukraine typically become acute at defined moments: on entry into the Ukrainian market through acquisition or greenfield investment; when reorganising an existing group following regulatory or commercial change; when implementing or reviewing holding structures and intercompany financing; and on exit, whether through a share sale, liquidation or redomiciliation. These are not merely theoretical planning exercises. Each of these events carries discrete tax consequences under Ukrainian law – consequences that differ substantially depending on how the transaction or structure is designed.
The same moments of change that create opportunity also create risk. A holding company that was appropriate at entry may generate withholding tax friction or fail a substance test years later. An IP structure that has not been reviewed against current anti-avoidance rules may attract transfer pricing scrutiny. A financing arrangement that appeared straightforward at the outset may fall within mandatory disclosure hallmarks that require reporting in one or more EU jurisdictions. Understanding where a structure stands – and where it could be challenged – is the starting point for coherent risk management.
If your group is approaching a transaction or restructuring in Ukraine and has not yet assessed the tax dimension, we are glad to discuss your situation. You can write to us at info@ferrazwhitmore.com or visit our contacts page.
Core Service Areas
Holding, Financing and IP Structures
For groups investing into Ukraine, the structuring of the holding layer, debt financing and IP ownership has direct consequences for the tax cost of upstreaming returns. Dividend flows, interest payments and royalties each attract withholding tax unless a bilateral tax treaty or specific domestic exemption applies. Treaty access, however, depends on substance: a holding company that cannot demonstrate genuine economic presence and decision-making capacity in its jurisdiction of incorporation faces the risk that treaty benefits are denied – a challenge that has become more common as Ukrainian and international tax authorities apply anti-avoidance analysis more actively.
The concept of participation exemption – where qualifying dividend income or capital gains at the holding level are exempt from tax – depends on the rules of the holding jurisdiction and on whether the structure satisfies applicable substance and anti-abuse conditions. When designing or reviewing a structure, Ferraz & Whitmore analyses the full chain: Ukrainian source taxation, treaty network, holding jurisdiction rules and the anti-avoidance overlay imposed by frameworks such as the Anti-Tax Avoidance Directives. Where the holding company is located in an EU jurisdiction, the interest limitation rule, exit taxation provisions, general anti-abuse rule and controlled foreign company rules introduced by Directive (EU) 2016/1164, together with the hybrid mismatch rules extended by Directive (EU) 2017/952, form part of the analysis.
For IP structures specifically, the transfer pricing aspects – arm's length pricing of royalties, cost-sharing arrangements and IP migration – are increasingly scrutinised. An IP structure that functions commercially also needs to be defensible under transfer pricing rules in each relevant jurisdiction.
Tax Risk Assessment and Due Diligence
Tax due diligence is a standard element of acquisition work in Ukraine, but its scope often needs to be wider than buyers initially anticipate. Beyond reviewing prior-year tax filings and open assessment periods, a thorough tax due diligence covers transfer pricing compliance, the treatment of cross-border payments, the characterisation of intercompany arrangements and any exposure arising from structural decisions taken in earlier periods. Historic exposure does not automatically transfer to a buyer, but it can affect pricing, require warranty and indemnity coverage or, in some structures, create real post-closing risk.
For groups that already operate in Ukraine, a tax control framework – a documented internal system for identifying, assessing and managing tax risk – is increasingly recognised as a tool that supports both compliance and the management of relationships with tax authorities. Our experience with tax control frameworks in other jurisdictions informs how we approach this work; for a case study on tax control framework implementation, see our case note from Italy, which illustrates the methodology in a comparable context.
Transfer pricing documentation and compliance form a distinct but connected component of tax risk management. Ukrainian rules require documentation for controlled transactions above relevant thresholds, and the State Tax Service of Ukraine has increased its activity in this area. A group that lacks coherent transfer pricing documentation – or whose documentation does not match the economic substance of transactions – is exposed to adjustments and associated penalties.
Mandatory Disclosure and DAC6
For arrangements with a cross-border dimension involving EU member states, the mandatory disclosure regime introduced by Directive (EU) 2018/822 (DAC6) may require reporting to the relevant EU tax authority. DAC6 applies to reportable cross-border arrangements that satisfy one or more prescribed hallmarks. Hallmarks cover, among other things, arrangements that involve significant discounts to notional tax liabilities, hybrid instruments, transfers of hard-to-value intangibles and arrangements designed to obscure beneficial ownership.
Where a Ukrainian investment structure involves an EU-based entity – as intermediary, holding company or financing vehicle – DAC6 obligations need to be assessed at the design stage rather than retrospectively. Penalty regimes for non-compliance vary by member state and can be significant. The existence of a reporting obligation does not itself mean a structure is impermissible, but it requires deliberate management.
Advance Certainty: Individual Tax Consultations
Ukrainian law provides a mechanism by which a taxpayer may seek an individual tax consultation from the State Tax Service of Ukraine. This is the primary tool available to obtain advance guidance on how a particular provision will be applied to a specific set of facts. An individual tax consultation can reduce uncertainty before a transaction is completed or a structure is implemented, and it has procedural relevance in subsequent dispute proceedings. The usefulness of this tool depends significantly on how the request is framed and what facts are disclosed: an imprecise or incomplete request may produce a consultation that does not address the key risk.
Ferraz & Whitmore assists clients in identifying whether an individual tax consultation is appropriate for their circumstances, preparing the factual submission and evaluating the response. In some situations, a consultation is not the right approach – either because the facts are not yet sufficiently defined, or because the question turns on anti-avoidance principles where general guidance is unlikely to bind the authority in a specific case.
Transactions, Reorganisations and Exit
Tax structuring advice is integral to corporate transactions in Ukraine. This includes pre-acquisition structuring to optimise the tax profile of the entry, post-acquisition integration of the acquired business into an existing group, and exit planning to manage the tax cost of a disposal, whether as a share sale, asset transaction or liquidation. Redomiciliation – the migration of a corporate entity to a different jurisdiction – involves specific tax consequences in Ukraine and in the receiving jurisdiction, and requires careful sequencing.
The Diia City special regime, available to qualifying IT and technology businesses operating in Ukraine, represents a discrete structuring consideration for groups active in that sector. The regime has its own rules for employment and profit distributions that interact with general Ukrainian tax law and with treaty obligations; groups considering Diia City participation should assess those interactions before committing to the regime.
For a broader discussion of corporate law considerations connected with reorganisations and transactions in Ukraine, our Ukraine corporate law page covers the legal framework for these procedures.
Dispute Path and Litigation Risk
When a tax authority challenge cannot be resolved at the assessment stage, Ukrainian law provides a structured dispute path: an administrative appeal within the State Tax Service of Ukraine, followed by recourse to the administrative courts, with ultimate review possible before the Supreme Court of Ukraine. The Supreme Court's role in harmonising the interpretation of tax law gives its decisions practical significance beyond individual cases; monitoring Supreme Court case law is part of responsible ongoing tax risk management for groups with material Ukrainian exposure.
The decision whether to appeal an assessment, and on what grounds, involves an analysis of the merits, the evidentiary record and the procedural consequences of each step. Ferraz & Whitmore works with clients to assess that decision and, where litigation is appropriate, to prepare and manage the dispute. Our Ukraine tax disputes practice is described in more detail on our tax disputes page.
Self-Assessment Checklist: Is Your Ukrainian Tax Structure Under Control?
The following questions are designed to help corporate groups identify gaps in their current approach to tax risk in Ukraine. They are indicative, not exhaustive.
- Has the holding structure been reviewed against current substance requirements and anti-avoidance rules in the relevant jurisdictions?
- Are intercompany transactions covered by contemporaneous transfer pricing documentation, and does that documentation reflect how the transactions actually operate?
- Have cross-border arrangements been assessed for DAC6 reportability in any EU jurisdiction involved in the structure?
- Is there a documented process for identifying and escalating tax risks as part of normal business operations?
- Have the tax consequences of any planned reorganisation, acquisition or exit been modelled across all relevant jurisdictions before the transaction is executed?
- Has the group obtained individual tax consultations on key positions, and are those consultations still accurate in light of subsequent regulatory or judicial developments?
- Has the group's exposure under the Diia City regime (if applicable) been assessed against the general Ukrainian tax framework and relevant treaties?
How Ferraz & Whitmore Approaches This Work
Our approach begins with understanding the commercial objective: what the client is trying to achieve, over what timeframe and with what constraints. Tax structuring advice that does not start from the commercial reality is unlikely to produce workable results. We map the existing or proposed structure against the applicable legal framework – Ukrainian law, relevant treaties and, where EU entities are involved, EU-level directives – and identify the risks and options available at each level.
We do not treat tax structuring as a one-time exercise. Structures require monitoring as law evolves, as the business grows and as the regulatory environment shifts. The anti-avoidance frameworks that have developed over the past decade across both Ukrainian and EU law have materially changed the risk profile of arrangements that were once considered routine. A structure that has not been reviewed recently may be carrying risks that did not exist when it was designed.
Our international background – working across Portuguese, EU and multiple other jurisdictions – allows us to engage with the cross-border dimension of Ukrainian tax structures with practical knowledge of how the rules interact on both sides of the transaction. That matters particularly where the holding or financing jurisdiction is within the EU and where DAC6, ATAD or domestic anti-avoidance rules create obligations or risks that a locally focused adviser may not identify.
To discuss a tax structuring question or a tax risk review in Ukraine, please contact our team at info@ferrazwhitmore.com or through our contacts page. We are glad to discuss the specific circumstances of your group before any formal engagement.
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.