Let's consider such a situation. It is planned to use a company registered in England (the organizational form of LTD) as the owner of a legal entity registered in Ukraine. At the same time, the beneficiary (beneficiary) of the English company will be an individual - a resident of Ukraine. The shareholder of the English company will be the nominee. Information on beneficiaries and shareholders is open.



At present, in the current legislative field of Ukraine, the obligation to declare its "beneficiary" ownership of a non-resident company exists only for officials of state bodies or state enterprises. Namely, in accordance with clause 5-1 of Part 1 of Art. 46 of the Law of Ukraine "On Counteraction to Corruption". The declaration shall specify ... legal entities whose ultimate beneficial owner is the subject of declaration or members of his family ". The submission of such a declaration is foreseen at the moment only for persons authorized to perform the functions of the state (Article 45, Article 3 of the Law). In 2017, these declarations file for 2016 persons who are particularly responsible in accordance with Art. 50 of the Law of Ukraine "On Counteraction to Corruption" (president, people's deputies, cabinet members, judges, prosecutors and other top level officials).
When submitting a tax return by natural persons, the declaration of beneficial ownership by a non-resident company is not provided. It is worth noting that the tax return obliges to indicate information about operations with investment assets (Annex F2 to the tax return of individuals). At the same time, the investment asset is determined by paragraphs. a) Clause 170.2.7 of the Tax Code of Ukraine through corporate rights or securities owned by an individual. That. mediated ownership (the beneficiary through a nominee shareholder) is not provided. Therefore, at the moment, in tax declarations, individuals do not declare their "beneficiary" ownership of a non-resident.




At the moment, licensing of investments abroad is limited only to owners of corporate rights, which they plan to own directly, i.e. without the participation of the nominee owner. The procedure for obtaining licenses for investing abroad is stipulated by the resolution of the NBU Board dated March 16, 1999, No. 122. If the investment is the acquisition of corporate rights, then corporate rights are defined in this order as: "... ownership of a part (share) in the authorized fund ...". Having no "direct" ownership of a part (share) in the charter capital of a non-resident, an individual can not be considered to be the one that made the investment. In this regard, such an operation is not subject to licensing in the NBU bodies.



One of their main goals for which the companies of England use are the receipt of dividends from Ukrainian legal entities. The rate of income tax in this case does not exceed 5%. Such transfer of funds is mainly used as protection of assets, since the basic rate of tax on incomes of individuals when dividends are transferred is also 5% (paragraph 167.5.2 of the Tax Code of Ukraine).

The beneficial owner of a company in England by a natural person resident in Ukraine can be complicated by the benefits of the Convention on the avoidance of double taxation between the United Kingdom and Ukraine. This risk is conditional on the application of a reduced 5% dividend rate, in which the company of England should have "the actual right to such dividends" (Article 10, paragraph 2, of the Convention on the avoidance of double taxation between the United Kingdom and Ukraine).

To assert clearly that the company of England does not have the actual right to dividends, so the beneficiary is an individual resident of Ukraine, is incorrect. On the contrary, it can be said that for every company the "cost" is the beneficiary, and receipt of funds by the company does not mean absence of the actual right of the company for such funds and automatic availability of rights to these funds from the beneficiary of the company.
At the same time, there is a risk of changing the tax rate on individuals' income when dividends are paid to England. In this case, the tax rate that is held in Ukraine will change from 5% to 18% (paragraph 167.5.1 of the Tax Code of Ukraine).
We estimate such a risk as insignificant for the following reasons:
- the imperfection of the wording of the Convention on the avoidance of double taxation between the United Kingdom and Ukraine regarding the interpretation of the phrase - "the actual right to dividends";»;
- lack of practice of such additional payments from the tax authorities of Ukraine. At the very least, we did not find practice in these registries of judgments.


So, we can conclude that a company registered in England in the form of LTD, may have a "beneficial owner" - an individual resident of Ukraine. In doing so, it is necessary to take into account the following restrictions stipulated by the legislation of Ukraine:
- mandatory declaration of its "beneficiary" ownership in case if an individual holds positions in state structures (state bodies, state enterprises);
- use of a nominee shareholder is desirable, as otherwise it is necessary to obtain a license from the NBU for investing abroad and filing a tax return with indication of the value of acquired corporate rights;
- there is a risk of tax deductibility of individuals' income on dividend transfers to England (the reason is the rate change from 5% to 18%). At the same time, we estimate such a risk as extremely low.


Alexey Korop
lawyer, PH.D.