Ukraine will provide information about millionaire refugees to other states

The tax office generates reports on the financial accounts of Ukrainians for exchange with other countries

Ukraine is fully ready to launch the international automatic exchange of information on financial accounts with other states according to the international reporting standard CRS (Common Reporting Standard). Acting Deputy Chairman of the State Tax Service of Ukraine Yevgeniy Sokur reported this to the Commander-in-Chief. Before the exchange occurs, the tax office must collect information from all financial institutions in Ukraine and generate appropriate reports in CRS format about tax residents of Ukraine. The reports must be ready by July 1, 2024—mostly wealthy Ukrainians who had at least a million dollars in their accounts as of July 1, 2023 will go there. The exchange of information between states will take place in September 2024.

“In the first report on accounts, the deadline for submission of which is July 1, 2024, reporting financial institutions are required to include information on accounts of individuals with a large balance of more than $1 million that were opened from 07/01/2023 to 12/31/2023,” they said. at the State Tax Service. It also noted that “the inclusion in the CRS report of information about other categories of reportable accounts is not prohibited.”

So, the tax office can also include in its first report information about whether individuals have financial accounts, even if less than $1 million is stored there. But this will affect a small number of Ukrainian refugees. The tax office claims that “the legislator protected the rights of Ukrainian citizens who were forced to leave Ukraine because of the war.”

Poor Ukrainians can be included in reports for the exchange of information about accounts?

“The majority of citizens who went abroad because of the war will not be affected by the start of the international automatic exchange of financial information while martial law is in effect in Ukraine,” the State Tax Service clarified. At the same time, they note that residents of Ukraine are not exempt from the obligation to report to the Service information on income received abroad that is subject to taxation.

“Information about the financial accounts of Ukrainian citizens will be included in CRS reports that will be filed by reporting financial institutions (banks) only if, for tax purposes, the Ukrainian citizen declares his or her resident status in a reporting jurisdiction other than Ukraine and the United States of America. “, the tax office clarified to the Commander-in-Chief.

For example, “information about bank accounts of Ukrainian citizens will be transferred to Germany only if the Ukrainian citizen, in a self-assessment document provided by a reporting financial institution, determines his tax residence (center of vital interests) in Germany.”

The concept of a “self-assessment document” about the center of vital interests is formulated in the law: in accordance with the requirements of the general reporting standard CRS, account holders are required, at the request of financial agents (banks), to provide “documents of self-assessment of tax residency status” defined by Law No. 2970. So, that Ukrainian (or Ukrainian woman) who is employed in another state, pays taxes there, has accounts in foreign banks, but also has accounts in Ukraine, must correctly determine his status: is he (or she) a resident or non-resident of Ukraine? A certain status will be recorded in the response to the bank’s request, and only then the bank will send this response to the State Tax Service.

Let us recall that in 2023, Parliament adopted Law No. 2970 amending the Tax Code and other legislative acts regarding the implementation of the international standard for automatic exchange of information.

“If a citizen of Ukraine who left Ukraine due to the war, and in the self-assessment document provided to the reporting financial institution (bank), identified himself as a resident of Ukraine, then the reporting financial institution has no basis for including the financial account of such a citizen in the CRS report. At the same time, if such a citizen determines himself to be a resident of Germany, then information about his financial account in Ukraine will be included in the CRS report and accordingly will be transferred to the competent German tax authority,” explains the State Tax Administration.

“Glavkom” wrote that the introduction of international exchange alarmed many Ukrainians who now live outside of Ukraine. After all, if the German social service finds out that refugees have funds in Ukrainian or German banks, in the best case, they will have to return the entire amount of social assistance paid over two years, as well as return the paid cost of housing and medical insurance - and this is already about 20 thousand euros per year. one person. If you don’t return it, you could face up to five years under German law.

The question also arises: won’t Ukrainians have to pay taxes in two countries at once - in Ukraine and also in a foreign country? No, you won't have to. The tax office claims that “national legislation contains all the necessary rules to avoid double taxation.”

The list of international treaties on the avoidance of double taxation is published on the website of the Ministry of Finance.

Ukraine will detect tax evasion abroad

Now Ukraine is forming a list of countries with which, at the first stage, it plans to exchange tax information on a bilateral basis. “Potentially, partners will be countries that have signed a multilateral agreement (except Russia),” notes the State Tax Service

The State Tax Service claims that the introduction of an international exchange of financial accounts will strengthen control over the timeliness and completeness of declaration of income subject to taxation, and identify undeclared income to combat tax evasion by individuals.