WHICH FOREIGN COMPANY IS CONTROLLED IN UKRAINE? WHO IS THE CONTROLLING PERSON?
A foreign company is recognized as a controlled foreign company if an individual resident of Ukraine or a legal entity – resident of Ukraine (hereinafter – controlling person, CFC):
a) owns a stake in a foreign legal entity in the amount of more than 50 percent, or
- b) owns a share in a foreign legal entity in the amount of more than 10 percent, provided that several individuals – residents of Ukraine and/or legal entities – residents of Ukraine own shares in a foreign legal entity, the amount of which in aggregate is 50 percent or more, or
- c) individually or together with other residents of Ukraine – as related persons, exercises actual control over a foreign legal entity.
Actual control is established based on, in particular, but not exclusively, at least one of the following circumstances:
- a) providing binding instructions by a person to the management bodies of a legal entity;
- b) conducting negotiations by a person regarding the conclusion of transactions by a legal entity and agreeing on the essential terms of such transactions, which are subsequently only formally approved by the management bodies of the legal entity or executed by the management bodies of the legal entity without further additional approval;
- c) the person has a power of attorney to perform essential transactions on behalf of a legal entity, issued for a period of more than one year, and does not require prior approval of such transactions by the management bodies of the legal entity;
- d) transactions by a person on the bank accounts of a legal entity or the possibility of blocking transactions on such accounts;
- e) designation of a person as the founder (beneficiary, actual beneficiary) of a legal entity when opening accounts by such a legal entity, except in cases where the assets of such a legal entity are part of the assets of a trust, fund, institution, other entity without the status of a legal entity, the founder (beneficiary) , the actual beneficiary) of which such a person is.
The controlling person is the payer of the tax on the profit of the controlled foreign company.