Tax changes are being prepared for Ukrainians abroad and businesses under EU rules

The Ministry of Finance is preparing to submit to the Verkhovna Rada a bill on the implementation of the European ATAD Directive aimed at combating tax evasion. The document may impact large and small businesses, foreign companies, and Ukrainians living abroad.

The bill is planned to be submitted to parliament by the end of August 2026. If adopted, the main changes are to take effect from January 1, 2028.

What the Finance Ministry proposes

Companies may face a limit on the amount of loan interest that can be included in expenses. The limit would be 30% of EBITDA. Expenses exceeding this threshold would not reduce taxable profit, so businesses would have to pay more income tax.

Also, an "exit tax" is being proposed. It would be paid by companies that move assets, production capacities, or parts of their business from Ukraine abroad. This rule will not apply to individuals and sole proprietors.

Of greatest concern to businesses is the right of the tax authorities to independently classify transactions as abuse. Specifically, a company's relationship with a so-called "salary sole proprietor" could be reclassified as employment. In that case, corresponding payments would be taxed at an increased rate of 30%.

What will change for Ukrainians abroad

The bill also revises the rules for determining tax residency. A person could be recognized as a resident of Ukraine if at least one connection to the country exists, such as housing, family, or a registered sole proprietorship.

Experts warn that some Ukrainians who have long been living and working abroad could thus be considered tax residents of two countries simultaneously. This creates the risk of double taxation and additional disputes with tax authorities.

The changes may also affect foreign companies. Under certain conditions, they could be recognized as tax residents of Ukraine. A refusal to register with the tax authorities is proposed to be fined UAH 600,000.

Business associations are calling for the document to be revised. They consider the proposed definitions overly broad and warn of legal uncertainty, an increased tax burden, and the risk of abuse by regulatory authorities.

The Finance Ministry plans to split the large document into several separate bills and introduce them to parliament gradually.

Based on materials from: Ekonomichna Pravda