On 20th March 2023 the parliament of Ukraine adopted law ? 8131 (the law) «On amendments to the Tax code of Ukraine on implementation of the international standard for automatic exchange of information on financial accounts».

The adoption of such law is the next step of Ukraine for implementing the Common Reporting Standard (CRS), developed in response to the G20 request and approved by the OECD Council on 15th July 2014.

Under the CRS, the financial organizations of a participating country are obliged to conduct the due diligence of financial accounts and automatically exchange such information with other jurisdictions on an annual basis.

The first automatic exchange in Ukraine is planned for 2024.

Taking into consideration that most countries of the world have joined the CRS, the adoption of automatic exchange in Ukraine is the logical and consistent next step following the international trend.

The implementation of the international standard for automatic exchange of information was predictable for Ukrainian businesses and citizens due to the long process of discussion of such amendments in the sphere of international tax planning.

The most important impact of changes will be for tax residents of Ukraine holding foreign companies and bank accounts abroad. The foreign financial organizations will transfer the information to the foreign local tax authority, and then automatically such information will be transferred to the Ukrainian tax authority.

Taking into consideration the new amendments, it is quite important for Ukrainian tax residents to comply with all tax requirements and declare their income obtained through foreign financial accounts.

For Ukrainian businesspeople, the specific regulation of controlled foreign companies together with automatic exchange requires a unique approach and analysis of corporate structure for adaptation.

We have seen a number of individuals considering their tax residency depending on their personal circumstances and status.

It is usually the case that tax residency is identified according to the individuals' place of residence for more than 183 days in a calendar year.

According to Cyprus' "60-day rule" in respect to tax residency, an individual can become a Cyprus tax resident if, amongst others, they cumulatively reside in Cyprus for at least 60 days, provided that they are not residing in any other country for the period exceeding 183 days.

At Michael Kyprianou & Co LLC - Ukraine, we are pleased to offer quality legal services regarding the corporate structure, as well as offering legal consultation on how a business can comply with the new legislation in Ukraine. We have fully fledged offices in Ukraine, Cyprus, Greece, Malta, United Arab Emirates, United Kingdom, Germany and Israel.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.