Implementation of the CRS Common Reporting Standard in Ukraine: What it means for business and citizens

International tax transparency has long ceased to be just a trend - it is now a global norm. Ukraine is actively moving towards the implementation of Common Reporting Standard (CRS) - A common reporting standard that ensures automatic exchange of financial information between tax authorities of different countries. This process is essential for the government, businesses, banks, and individuals.

🌍 What is CRS and why is it needed

CRS (Common Reporting Standard) - is an international standard developed by The Organization for Economic Cooperation and Development (OECD), which provides for automatic exchange of financial data between the tax authorities of the participating countries.

The purpose of this standard is to Combating tax evasion by concealing income in foreign financial institutions.

Today, the CRS system has been joined by more than 120 countriesincluding all EU countries, the United Kingdom, Canada, Australia, Switzerland, and now Ukraine.

⚖️ Ukraine on the way to full CRS implementation

Ukraine has committed itself to implementing the CRS as part of the implementation of international agreements, in particular:

• BEPS (Base Erosion and Profit Shifting) plan;

• Association Agreements with the EU;

• Memoranda with the IMF and the World Bank.

In 2022-2023, the Verkhovna Rada adopted a number of laws that adapted Ukrainian legislation to CRS standards. The key document was the Law of Ukraine No. 2970-IX of March 20, 2023, which amended the Tax Code and other regulations.

It is planned that Ukraine will start full-fledged exchange of financial data in 2025transmitting information for the 2024 reporting year.

💰 What kind of data will be transmitted

Financial institutions (banks, insurance companies, investment funds, trusts, depositories) will be obliged to collect and submit to the State Tax Service data on customers that are tax residents of other countriesparticipating in the CRS.

Such data includes:

• Name, address, date and place of birth;

• tax identification number (TIN);

• information about accounts and their balances;

• income, dividends, interest, proceeds from the sale of securities;

• data on controlling persons (for companies, trusts, etc.).

The STS then automatically transmits this data to the tax authorities of other countries and receives relevant information from them about Ukrainian residents.

🧾 How it will affect individuals

For ordinary citizens, the implementation of the CRS means that it will become almost impossible to hide income abroad.

In particular:

• If a Ukrainian has an account in a Swiss or Polish bank, information about it will be transferred to the State Tax Service;

• if a resident of another country has an account in Ukraine, the data on it will go to the tax authority of their country;

• banks may require filling out special questionnaires on the client's tax residence (self-certification).

⚠️ If the client refuses to provide the data or provides false information, the bank may refuse to open or maintain the account.

🏦 What will change for banks and financial institutions

Financial institutions in Ukraine should become full members of the CRSwhich provides:

1. Identification of clients' tax residency (due diligence procedures);

2. Data collection, storage and transmission to the State Tax Service;

3. Protection of personal information in accordance with the requirements of the GDPR and Ukrainian legislation;

4. Regular reporting - annually by June 30 for the previous year.

To do so, banks will have to update their internal IT systems, application forms, customer agreements, and privacy policies.

💼 How CRS will affect business

For Ukrainian companies, especially those with foreign shareholders or structures abroad, CRS will become an additional control tool.

After full implementation:

• offshore accounts will no longer be an effective way to hide profits;

• controlling persons (beneficial owners) will be clearly identified;

• tax authorities will be able to check Correspondence between declared income and real assets;

• companies will have to ensure transparent ownership structure.

Thus, the CRS encourages businesses to move to legal tax optimization instead of evasion.

⚖️ Liability for violations

Violation of CRS requirements entails serious consequences. In particular:

• fines for failure to provide or distortion of information;

• sanctions for banks in case of systematic violations of reporting;

• criminal liability for intentional tax evasion or concealment of income.

In addition, the client's refusal to provide tax information may result in freezing of the account or termination of the service agreement.

📊 CRS and Ukrainian taxes

The implementation of the CRS is closely linked to other reforms in the area of financial transparency, in particular:

• control over CFCs (controlled foreign companies);

• exchange of information in accordance with FATCA (USA);

• improving financial monitoring;

• digitalization of tax administration.

All this creates a unified system that allows tax authorities to see a complete financial picture of the taxpayer.

🧠 Tips for business and citizens

1. Check your tax residence. If you have accounts abroad, determine in which country you are required to declare your income.

2. Analyze the structure of companies. If you have foreign companies or trusts, prepare documents to confirm the sources of funding.

3. Review your tax strategy. CRS is a signal to legalize assets.

4. Seek legal advice. Specialists will help you assess risks, avoid double taxation, and prepare reports.

🧑‍⚖️ How AxelLegal can help

Attorneys at law AxelLegal provides comprehensive support on international taxation, financial reporting and CRS implementation.

We will help:

• audit financial transactions and accounts;

• prepare a company or individual for CRS reporting;

• build a tax structure in line with international requirements;

• accompany during inspections by the State Tax Service or foreign authorities.

🔍 Conclusion

The implementation of the CRS is another step towards Ukraine's European standards of tax transparency. Although the new requirements may seem complicated, they create a fairer business environment, increase confidence in the financial system, and facilitate Ukraine's integration into the global economy.

For citizens and companies, CRS is not only a challenge, but also an opportunity legalize assets, improve reputation and avoid risks in the future.