Author: admin_fedoryshyn

Author: Anastasia Holovatyuk, Lawyer at F&P

A tax debt is not just a line in a taxpayer’s card. It is a mechanism that triggers a chain of consequences: a tax claim, a pledge of assets, seizure of funds on accounts, a travel ban for the director, and in some cases, criminal proceedings under Article 212 of the Criminal Code. At the same time, the rules of the game have changed under martial law: some of the collection mechanisms have been suspended, some work differently, and some new opportunities have opened up for taxpayers.

How tax debt arises and why it is important to understand it formally

A tax debt is the amount of an agreed monetary obligation that has not been paid within the established period (subpara. 14.1.175 of the Tax Code). The key word is “agreed”. While the TND is under appeal (administrative or judicial), the obligation is not agreed upon and no tax debt arises. This is fundamentally important: if you have appealed the TND in time, the STS has no right to include this amount in the debt.

The debt arises either after the deadline for appealing or after the court decision confirming the TND comes into force. From that moment, the countdown begins: 10 business days for voluntary payment, after which the STS has the right to apply collection measures.

Tax claim and pledge: how it works

The first step of the State Tax Service is to send a tax demand. This is a formal document that sets out the amount of the debt and the period for its repayment (at least 30 calendar days). Simultaneously with the sending of the demand, the right of tax lien arises: The STS automatically receives a priority right to the payer’s assets (Article 89 of the Tax Code).

All of the taxpayer’s assets – real estate, equipment, transportation, inventory, and funds on accounts – are pledged. This is not a theoretical right: The State Tax Service registers the lien in the State Register of Encumbrances on Movable Property and can restrict the disposal of assets.

The tax claim is appealed separately. If you disagree with the amount of the debt or believe that the obligation is not agreed upon, file a lawsuit. There is a court practice when claims are canceled due to a violation of the procedure or because the debt was formed on the basis of a canceled TND.

Installment plans and deferrals: terms and conditions

The TCU provides for the possibility of installment or deferral of tax debt (Article 100 of the TCU). Installment means payment in installments according to a schedule. Deferral is the postponement of the payment date to a later date.

To obtain it, you need to: submit an application to the State Tax Service, provide an economic justification (why you cannot pay immediately), a repayment schedule, and collateral (pledge or surety). The STS makes a decision within 30 days.

Reality: The State Tax Service rarely approves installment plans for large amounts without good reason. However, during martial law, the chances are higher – especially if the company has suffered from hostilities, lost assets or sales markets. Subsection 10 of Section XX of the Tax Code contains certain provisions that mitigate the conditions for taxpayers during martial law.

Write-off of bad debt

A separate mechanism is the write-off of bad tax debt (Article 101 of the Tax Code). A debt may be recognized as uncollectible if: the payer is liquidated (and there is no property to repay); the statute of limitations has expired (1095 days); the debt arose as a result of force majeure.

During martial law, an additional ground appeared: the debt incurred by taxpayers located in the territories of active hostilities or temporarily occupied territories. However, the write-off procedure is not automatic. You need to submit an application, justify it, and prove it. And often the State Tax Service refuses, and this refusal can also be appealed.

Personal risks of the director

This is something that directors often don’t think about until it’s too late.

Article 212 of the Criminal Code is tax evasion. Criminal liability arises if the intentional tax evasion is committed in a significant amount (over 3,000 NMDG, i.e. UAH 51,000). A fine, community service, restriction or imprisonment are possible, depending on the amount and circumstances. The key word is “intentional”. If the debt arose due to objective reasons (war, loss of markets, mistake) and not due to an evasion scheme, this is a different situation.

Subsidiary liability. If a company is driven to bankruptcy due to the actions or inaction of a director, he or she may be held vicariously liable for the company’s debts. This is the subject of a separate article.

If your company has a tax debt or you have received a tax claim, don’t delay: analyze the situation, evaluate your options (appeal, installment plan, write-off) and act. We will help you choose the best strategy.

 

Do you have a similar situation? Send us your documents and we will analyze your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

In 2020-2021, hundreds of Ukrainian companies imported personal protective equipment on a preferential basis, i.e. without import duty and VAT. The reason was CMU Resolution No. 224 of 20.03.2020, which allowed preferential treatment for goods from the approved List aimed at combating COVID-19.

Now, three to four years after import, customs authorities are conducting audits of these transactions. And the results are predictable: massive additional charges. The logic of the customs is simple: if the gloves were later sold as household goods, it means that the benefit was applied illegally. Below is an analysis of a case in which we proved that this logic is wrong, and which has direct implications for any importer who has used COVID benefits.

Legal construction of the privilege: where customs is wrong

Resolution No. 224 defines the list of goods to combat COVID-19 based on two criteria: the name of the product and the UKTZED code. For nitrile and latex gloves, this is code 4015. The Resolution does not contain any additional conditions for labeling, packaging or further use of the goods after importation. There is no requirement that the gloves be sold in pharmacies or labeled as medical.

This is a fundamental point that customs systematically ignores. The customs authorities are actually adding a requirement to Resolution #224 that is not in it: that the goods be used exclusively “to combat COVID-19” after importation. But the law does not set such a requirement. The exemption is determined at the time of border crossing, based on objective criteria – the UKTZED code and the List.

Notification of the State Labor Service: a key document that is often underestimated

The second legal instrument on which this privilege is based is the notification of the SLS. According to paragraphs 1-1 of CMU Resolution No. 761, personal protective equipment may be put into circulation on the basis of a notification from the SLS without meeting the requirements of technical regulations. This is a special mechanism created specifically for the pandemic.

In our case, the company received notifications from the State Labor Service for each customs declaration. These notifications had not been canceled at the time of the audit, which was confirmed by an official letter from the State Labor Service. Customs knew this fact, but simply ignored it in the inspection report.

Please note: if you used the COVID benefit and have notifications from the State Labor Service, check their status. As long as they are valid, this is your strongest argument.

The mistake of the court of first instance: a lesson for those who stop at the first refusal

The court of first instance dismissed the claim. The reason is illustrative: the judge applied the Technical Regulation on Medical Devices instead of the Technical Regulation on Personal Protective Equipment. This is a fundamental mistake – gloves imported as PPE under Resolution No. 761 are regulated by the PPE TR, not the Medical Devices TR. Different regulations, different requirements, different legal consequences.

In addition, the court completely ignored the conclusions of laboratory tests confirming the effectiveness of gloves against SARS-CoV-2 and a letter from the Ministry of Health recognizing the possibility of using “household” gloves to prevent COVID-19.

The Court of Appeal corrected all this and satisfied the claim in full. But this example is important for practice: losing in the first instance is not a reason to give up. Especially in complex cases where the court of first instance may not understand the specifics of the regulation.

What does this mean for your business?

If you used COVID benefits in 2020-2022, be prepared for an audit. Customs is systematically reviewing these transactions. Here’s what you should do now:

• Check the status of notifications from the State Labor Service. If they are valid, save the confirmation.
• Collect laboratory reports or certificates confirming that the product meets the characteristics of PPE.
• Check whether your product is included in the List of Resolution No. 224 by the UKTZED code.
• If you receive an audit report with additional charges, do not automatically agree. Practice shows that these cases are won in court, even if the first instance refuses.

 

Do you have a similar situation? Send us your documents and we will analyze your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

Author: Viktoriia Staryk, lawyer at F&P

The classification of goods is one of those customs tools that can change the economics of an import transaction in a minute. You have declared goods under one UKTZED code, and the customs believes that the correct code is another. The difference in one digit can mean a change in the duty rate from 0% to 10%, an additional anti-dumping duty, or even an import ban. And suddenly your profitable operation becomes unprofitable.

Why classification is not a technical issue

At first glance, determining the UKTZED code is a technical procedure: look at the commodity nomenclature, find the right item, and enter it in the declaration. But in reality, classification is an area of conflict of interest. The importer is interested in a code with a lower duty rate. Customs is interested in a code with a higher rate. And when the goods do not fall unambiguously under one item (and this happens much more often than it seems), a dispute begins.

Are nitrile gloves code 4015 (rubber products) or 3926 (plastic products)? Is a multifunctional device a printer, scanner, or copier? Is a corn and cheese snack a product of grain processing or a finished product? Each of these classifications has a different duty rate.

How customs makes a classification decision

The procedure is defined by Article 69 of the CCU and the Procedure for Maintaining the UKTZED. The customs authority may make a classification decision:

• During customs clearance – if it does not agree with the code specified by the declarant
• Retrospective reclassification based on the results of an inspection after the goods have been released
• Based on the results of a laboratory test or examination

Important: the customs authority must make a classification decision, not just refuse to clear the goods. If, instead of a classification decision, a refusal card is issued with the wording “incorrect code”, this is a procedural violation that is appealable.

Six Basic Rules of Interpretation: What You Need to Know

The UKTZED is based on the Harmonized Commodity Description and Coding System (HS), which has six Basic Rules of Interpretation (BRI). The classification of any product is determined by the consistent application of these rules. The courts review whether the customs has applied them correctly when considering disputes.

Rule 1 – the classification is determined by the texts of the commodity items and notes to sections and groups. This is the main rule, and often a sufficient one. If the text of the item clearly describes your product, the classification is unambiguous.

Rule 3 – applies when a product can be classified to two or more items. The rule provides for the choice by the degree of specificity of the description, by the component that provides the main characteristic, or by the item with the highest serial number. This is where most disputes arise, as each of these criteria is subject to interpretation.

Rule 6 – classification within subheadings is similar to classification at the item level. This means that all the same rules and notes apply at the level of 6, 8, 10-digit codes.

Preliminary decisions: how to reduce the risk before importation

The Customs Code provides for the possibility of obtaining a preliminary decision on classification (Article 23 of the CCU). This is a decision of the customs authority that determines the UKTZED code for a particular product BEFORE its actual importation. The preliminary decision is binding on the customs authorities for three years.

For importers who regularly import complex or ambiguous goods, this is the most effective tool for minimizing risk. Instead of arguing with customs at each clearance, you receive a decision once and then refer to it.

To obtain a license, you must submit an application with a detailed description of the goods, photos, technical specifications, and a sample (if possible). The processing time is up to 30 days.

Appealing a classification decision

If the customs office has made a classification decision with which you disagree, the procedure for appealing is similar to other customs decisions: an administrative complaint (10 working days) or a lawsuit in an administrative court (6 months).

In court, expertise plays a key role. The opinion of the Chamber of Commerce and Industry or other authorized organization on the characteristics of the goods and their classification is one of the most important pieces of evidence. If you are preparing for a dispute, order an expert opinion in advance.

Another important argument is the practice of classifying similar goods by other customs authorities or other countries. If the same product is classified under the same code in the EU and Ukraine has committed to harmonize its nomenclature, this is an argument in your favor.

If customs has changed the code of your goods, send us the classification decision. We will analyze the legality and tell you whether there are grounds for appeal.

 

Do you have a similar situation? Send us your documents and we will analyze your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

Author: Aliona Yevtushenko, lawyer at F&P

Most importers find out about the existence of a rejection card at the worst possible moment – when the cargo is already at customs, and instead of releasing the goods, the system issues a notice of rejection. This is followed by downtime, storage costs, and disrupted deliveries to contractors. In this situation, many people start looking for ways to “negotiate” or simply re-fill out the declaration, agreeing to the terms of the customs. But often the correct answer is different: the refusal card should be appealed.

This article is not a general overview of the law. We will analyze in which specific cases the refusal card is illegal, what rules to rely on when appealing, and what procedural violations by customs most often become the basis for its cancellation in court.

What is a refusal card and what is its place in the registration procedure

A refusal card is a formalized decision of the customs authority provided for in Article 256 of the Customs Code and Section VII of the Procedure for the Execution of Customs Formalities (Order of the Ministry of Finance No. 631). By its very nature, it is an individual administrative act: a written, reasoned decision on the impossibility of customs clearance.

It is crucial to understand how a refusal card differs from a decision to adjust the customs value. Adjustment is when customs says: “We will clear your goods, but at a different price”. A refusal card is when customs says: “We will not clear your goods at all”. Often these two decisions are issued simultaneously, but they need to be appealed separately, and the defense tactics are different in each case.

Five grounds for refusal that customs uses most often (and what is wrong with them)

1. “The declaration does not contain all the information or is submitted without the necessary documents”. This is a reference to clause 11 of Article 264 of the CCU. Formally, it is a legal ground. However, in practice, customs often interprets it in an expanded way: it requires documents that are not included in the exhaustive list established by Article 335 of the CCU. For example, the manufacturer’s price lists, export declarations of the country of shipment, and explanations of discounts. The Supreme Court has repeatedly emphasized that the list of documents set out in the Code is exhaustive, and customs has no right to require additional documents as a condition for clearance.
2. “There are grounds to believe that the declared customs value is unreliable”. This is the most common ground, and at the same time the most vulnerable for customs in court. The fact is that Article 54 of the CCU clearly defines when the authority has the right to reject the declared value. Mere “doubts” without specific factual grounds are not a sufficient reason. If the refusal card says something like “there are reasonable doubts about the numerical values of the components of the customs value” without specifying which ones, this is a weak decision that has a high chance of being canceled.
3. “Incorrect classification of goods”. The customs believes that your UKTZED code is incorrect and refuses to clear the goods. There is a subtle nuance here: according to the procedure, the customs authority must make an independent classification decision, not just refuse. If, instead of a classification decision, a refusal card is issued with the wording “incorrect code”, this is a procedural violation.
4. “Violation of prohibitions and restrictions”. For example, the absence of a permit, certificate, or license. Here, you need to look at each specific case: whether this product really needs this permit, or whether customs mistakenly applies restrictions to goods that do not apply.
5. Refusal without a clear motivation. It happens more often than we would like. The refusal card contains general phrases, references to “non-compliance with the requirements of the law” without specifics. Article 256 of the CCU explicitly requires that the decision must state the reasons for the refusal and provide “comprehensive explanations of the requirements, the fulfillment of which ensures the possibility of customs clearance.” If this is not the case, the decision does not comply with the law.

Deadlines: what needs to be done and when

Administrative appeal to a higher-level customs authority – 10 working days from the date of receipt of the refusal card (Chapter 4 of the CCU). In practice, this route rarely works: customs almost never reverses its own decisions in an administrative procedure. But sometimes it’s worth going through it, if only to fix the position and get an official response that can then be used in court.

Judicial appeal – a lawsuit to the district administrative court within 6 months. Important: an administrative appeal is not a prerequisite for going to court. You can file a lawsuit right away. In our experience, this is often more expedient – especially when the goods are worthwhile and every day is money.

It is also worth remembering that the decision to refuse must be made within the time limit set out in Article 255 of the CCU for completing customs clearance (4 business days, in exceptional cases – up to 30). If the customs has not made any decision within this period, this is an inaction that is appealed separately.

What the court pays attention to: key arguments

The analysis of court practice shows several stable positions that the Supreme Court relies on when considering cases on refusal cards:

Motivation. The customs decision must be specific, not formal. The court checks whether the refusal card indicates which documents were missing, which information is unreliable, and which regulations the declaration does not comply with. General wording is grounds for revocation.

List of documents. The courts have consistently upheld the position that customs does not have the right to demand documents outside the list set out in Article 335 of the CCU. If the refusal is motivated by the failure to provide a document that is not included in this list, the decision is illegal.

The consultation procedure. When controlling the customs value, Article 57 of the CCU provides for a consultation procedure between the customs and the declarant. If the customs skipped this stage and immediately issued a refusal card with adjustments, this is a violation of the procedure, which the courts pay attention to.

The arguments are at the court stage. An important nuance: The Supreme Court has repeatedly noted that the customs authority has no right to provide new grounds for refusal at the stage of court proceedings that were not specified in the card itself. That is, if the card says one thing, but the customs says something else in court, these new arguments are not accepted.

A practical algorithm of actions

If you received a rejection card, the procedure is as follows:

First, save everything. The refusal card, the decision on adjustments (if any), the customs declaration, all documents that were submitted, correspondence with the customs. Do not delete anything from the electronic cabinet.

Second, analyze the grounds. Read the card carefully: what exactly is indicated as the reason for refusal. Compare it with the actual list of documents you submitted. Are all customs requirements based on specific provisions of the Code?

Third, decide on a strategy. You have three options: (a) comply with the customs requirements and submit a new declaration if the requirements are legitimate and you really missed something; (b) file an administrative complaint; (c) go to court immediately. The choice depends on the specific circumstances, the amount of the dispute, and how urgently you need the goods.

When you should not appeal

To be honest, not every rejection card makes sense to appeal. If you really did not submit the document required by Art. 335 of the TCU, it is easier to submit it and re-execute the declaration. If the mistake in classification is really yours, it is cheaper to fix it than to go to court. We always advise our clients to start with an honest analysis of the situation. It makes sense to appeal when customs acts beyond its authority, demands unnecessary things or does not follow the procedure.

That’s why we offer a free preliminary assessment: you send us a refusal card and supporting documents, we analyze and honestly tell you whether there is a prospect, and if so, what strategy will be optimal.

 

Did you get a rejection card? Send us your documents and we will evaluate your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

Author: Olena Andriyko, lawyer at F&P

Cases on violation of customs rules are one of the most practically significant and at the same time underestimated categories of customs disputes. Often, entrepreneurs perceive the drawing up of a protocol on fuel and lubricants as inevitable: “we will pay the fine and forget about it”. But this is a wrong approach. Firstly, the amounts of fines can be significant (up to 150% of unpaid customs duties under Article 485 of the CCU, confiscation under Articles 472, 473). Secondly, not every protocol is drawn up legally. Thirdly, even a legitimately drawn up protocol does not mean that the fine cannot be canceled or reduced.

What is fuel and lubricants from a legal point of view

Violation of customs rules is an administrative offense under Chapter XVIII of the Customs Code (Articles 458-485). This is not a criminal offense (although in some cases, fuel and lubricants may border on smuggling under Article 201 of the Criminal Code, but that’s another story). Administrative penalties for fuel and lubricants are provided for: a fine and/or confiscation of goods.

Importantly, fuel and lubricants cases are considered either by the customs authority itself or by the court, depending on the type of violation and the amount of the fine. Cases involving confiscation or fines exceeding a certain threshold are considered exclusively by the court. This is important because your chances of defense in court are much higher than when the case is considered by the customs authority itself.

The most common reasons for drawing up a protocol

False declaration (Article 472 of the CCU). The quantity, weight, name, or characteristics of the goods are incorrect. This is the most common reason. The penalty is 300% of the unpaid customs duties. However, there is a nuance: if the discrepancy arose through no fault of the declarant (for example, a supplier’s error in the documents or a technical error in weighing), this may be grounds for exemption from liability.

Failure to declare commercial goods (Article 472 of the CCU). Failure to declare accurate and reliable information about goods subject to mandatory declaration in the prescribed form. The sanction is serious: a fine of 100% of the value with confiscation. But it must be proved that the failure to declare was intentional. If the goods were in the vehicle and the declarant did not know about them, this is a completely different situation. Cases under this article are considered exclusively by the court.

Violation of the terms of transit or temporary storage (Articles 469, 470 of the CCU). Фіксовані штрафи, зазвичай менш значні. Але навіть тут бувають ситуації, коли порушення строку відбулося з об’єктивних причин (форс-мажор, бойові дії, пошкодження інфраструктури).

Violation of the customs regime (Articles 474, 476, 477 of the CCU). For example, the use of temporarily imported goods for other purposes or failure to export them within the established time limit. Often applies to equipment, vehicles, and exhibition samples.

Sending prohibited goods in postal and express mail (Article 473 of the CCU). An article that is becoming increasingly relevant with the growth of international e-commerce. It concerns the shipment of goods prohibited for such shipment across the customs border in international postal and express shipments. The sanction is the confiscation of goods. Moreover, the protocol is often drawn up against the recipient, even if he or she was not aware of the ban. A typical situation: an entrepreneur has ordered a shipment of goods that has fallen under restrictions (for example, dual-use goods or certain chemicals) through an international platform, and learned about the ban at the post office along with the protocol. The defense here is based on the absence of intent and whether a particular product is actually banned.

Evasion of customs duties (Article 485 of the CCU). This is one of the most serious and frequent grounds for protocol. The article covers a wide range of actions: declaring false information regarding the weight, quantity, country of origin, UKTZED code or customs value of goods in order to reduce customs payments; providing documents with such information; failure to pay payments on time; and using preferential goods for other purposes. In essence, this is a “catch-all” article under which the customs authorities can cover a wide range of situations, from real evasion schemes to bona fide classification errors.

An important nuance regarding Article 485: previously, the sanction was a fixed 300% of the unpaid amount of customs duties. The Constitutional Court declared this non-alternative sanction unconstitutional, as it made it impossible to individualize liability based on the circumstances of the case, the form of guilt and the nature of the violation. Following this CCU decision, the sanction was changed to a fine of 50 to 150% of the unpaid amount. This is fundamentally important for the defense: now the court has the opportunity and obligation to take into account specific circumstances – whether the violation was intentional, the amount of actual damage, and whether there are mitigating circumstances. If you have been charged the maximum 150%, you can always appeal this with a request for a reduction.

Procedure: from protocol to resolution

Understanding the procedure is the key to effective defense. A case on fuel and lubricants begins with the drawing up of a protocol by a customs official. Then the case is considered either by the customs office itself (by the head or his deputy) or is referred to the court.

When drawing up a protocol, you have the right to: familiarize yourself with all case materials, provide explanations, submit evidence, file a petition, and use the assistance of a lawyer. These rights are expressly provided for in Article 498 of the CCU. Practical advice: if you are being drawn up a protocol, do not refuse to sign it, but be sure to include your comments and disagreement. The phrase “I do not agree with the protocol, I will provide explanations separately” is your minimum.

During the proceedings: you have the right to participate in the proceedings, give explanations, submit motions and evidence. If the case is being considered by customs, your presence is not mandatory, but recommended. If it is a court, be sure to have a lawyer present.

Defense strategy: what to rely on

The defense in fuel and lubricants cases is built on several levels:

Procedural violations. Have the terms of the protocol been met? Was the person properly notified? Have the rights been explained? Does the protocol contain all the mandatory details? Violation of the procedure is an independent ground for setting aside the resolution.

Absence of corpus delicti. Is there an intent? Is there a fault of this particular person? For example, if the discrepancy in weight is due to different methods of weighing (gross/net, with/without a pallet), this is not an inaccurate declaration.

Insignificance. Article 487 of the TCU provides for the possibility of exemption from liability for insignificant violations. If the actual consequences of the violation are minimal and the taxpayer acted in good faith, the court may limit itself to an oral warning instead of a fine.

Mitigating circumstances. Article 486 of the CCU contains a list of mitigating circumstances: voluntary elimination of consequences, commission of an offense due to a combination of aggravating circumstances, etc. The existence of mitigating circumstances may significantly affect the amount of the penalty.

Appeal against the decision

The decision to impose a penalty for fuel and lubricants is appealed to the court within 10 days from the date of its delivery (Article 529 of the Commercial Code). Please note: the term is calculated from the date of delivery, not from the date of the resolution. Missing the deadline is a serious problem, although the court may extend it if there are valid reasons.

The court can cancel the decision in full, change it (reduce the fine) or return the case for a new hearing. Important: in court, the burden of proof lies with the customs authority – it is the customs that must prove the fact of the violation, the guilt of the person and the legality of the penalty imposed.

What not to do

Some common mistakes we see in practice:

• Do not try to resolve the issue “on the spot” while drawing up the protocol. Any word you say can be used against you. Record your disagreement in writing and contact a lawyer before the case is heard.
• Do not ignore the protocol. Even if you think it is absurd, not appearing at the hearing and not appealing the decision means that you actually agree to the fine.
• Don’t confuse fuel and lubricants with criminal liability. If the amount of the hidden goods exceeds a certain threshold, it may be smuggling (Article 201 of the Criminal Code). This requires a completely different strategy and the mandatory involvement of a lawyer from the first minute.

Our team has experience in customs matters, including experience in the State Customs Service. If you have been issued a report on fuel and lubricants or received a fine order, send us your documents. We will analyze whether there are grounds for appeal and offer the best strategy.

 

Do you have a similar situation? Send us your documents and we will analyze your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

Cancellation of tax invoices. Closing cases on violation of customs rules. Refund of overpaid customs duties. Representation from the moment of administrative appeal to the Supreme Court.

Fedoryshyn & Partners is a company for which customs disputes are a daily routine, not a one-time experiment. More than 100 cases across Ukraine: customs value adjustments, refusal cards, fuel and lubricants protocols, classification decisions. We know how customs thinks and how to work with it.

 

Send the decision to the customs office – we will assess the prospects of appealing for free.

Phone: +38 093 722 56 33 | Email: fo@fedoryshyn.com

Why us?

Customs law is one of the company’s key practices. We don’t just know the Customs Code – we know how customs makes decisions. Why this backup method, why these “similar goods”, why these grounds in the refusal card. This understanding allows us to build protection on a point-by-point basis – not according to a template, but for a specific situation.

What sets us apart:

• Focuses on customs and tax law. These are the key practices of the company with the largest volume of cases, a well-established methodology and a team that deals with them on a regular basis.
• Geography – all of Ukraine. We work with customs offices all over the country and know the specifics of each one.
• All instances. We work from the initial analysis of documents to cassation in the Supreme Court.
• An honest assessment. If the case is unpromising, we will say so before we start working, not after payment.

What situations do people contact us with

Adjustment of customs value

The customs decided that your goods are worth more than you declared and charged additional customs duties. You were issued a decision to adjust the customs value and a refusal card along with it.

This is the most common type of customs dispute. According to the statistics of the Supreme Court, in most cases of customs value adjustment, decisions are made in favor of the importer, provided that the declarant has provided a full package of documents in accordance with Article 53 of the CCU and has correctly applied the main method of customs value determination (Article 58 of the CCU).

What we do:

• Analyzing the decision on adjustments and the grounds relied on by the customs
• We check whether the procedure has been followed (Articles 54-55 of the Commercial Code): whether there was a consultation, whether a reasoned justification was provided, whether the reserve method was correctly applied
• We appeal administratively (complaint to the State Customs Service) and/or in court
• We refund overpaid customs duties after the decision is canceled

 

Card of refusal in customs clearance

You have been denied the release of goods into free circulation. A refusal card is not just a formality: while it is valid, the goods are kept in the customs warehouse, and you incur direct losses – warehouse rent, production downtime, and breach of contracts.

The grounds for issuing a refusal card are defined in Article 256 of the CCU. In practice, the customs often goes beyond these grounds or fails to provide proper justification. In such cases, the decision is subject to revocation.

What we do:

• Analyzing the refusal card for compliance with the requirements of Art. 256 of the TCU and Order of the Ministry of Finance No. 631
• Prepare a complaint or lawsuit demanding to oblige the customs to complete the clearance

Protocol on violation of customs regulations (PMM)

The customs drew up a protocol for failure to declare, false declaration, evasion of customs duties or other violations (Articles 468-485 of the CCU). The consequences range from fines to confiscation of goods.

What we do:

• We analyze the protocol for procedural violations (deadlines, drafting procedure, notifications)
• Assessing qualifications
• Preparing a defense position for a court hearing
• We are working to reduce the sanction or completely close the proceedings

Classification of goods according to UKTVED

Customs changed the product code and the duty rate increased. Or vice versa: you are not sure of the correct classification and want to avoid risks before the delivery.

Classification disputes are among the most technically complex. They require not only knowledge of the Basic Rules of Interpretation of the UKTZED and the Explanatory Notes to the Harmonized System, but also an understanding of the technical characteristics of a particular product.

Що ми робимо:

• Analyzing the correctness of the classification according to the Basic Rules of Interpretation
• We appeal against classification decisions in administrative and judicial proceedings
• If necessary, we engage the expertise of the CCI or independent experts

Customs inspections (in-house and documentary)

Customs initiated an inspection – desk or documentary (scheduled/unscheduled). The results are additional charges, fines, or a fuel and lubricants report.

What we do:

• We accompany the inspection from the moment of receipt of the order – we monitor compliance with the procedure
• Preparing objections to the inspection report
• Appealing against the tax violation notification letters issued based on the results of a customs inspection

How we work

Step 1. Analyze the situation

You send us the customs decision, protocol or other document. We study the materials and provide a written opinion within 1-2 business days: whether there are grounds for appeal, what are the prospects and what is the best way to resolve the issue. This stage is free of charge.

Step 2. Strategy and actions

If you decide to work with us, we agree on a strategy, terms, and cost. We prepare a complaint or a lawsuit, collect evidence, and, if necessary, file a security for the claim to unlock the goods.

Step 3. Representation

We represent your interests in the State Customs Service, administrative courts of all instances, including the Supreme Court. You receive regular reports on the progress of the case.

Step 4. The result

After a positive decision, we monitor its implementation: refund of overpaid payments, clearance of goods, and closure of proceedings.

 

Send the decision to the customs office – we will assess the prospects of appealing for free.

Phone: +38 093 722 56 33 | Email: fo@fedoryshyn.com

Results of work

Case 1. Cancellation of customs value adjustment and refusal card

Situation. An importer of chemical raw materials submitted for customs clearance two consignments of goods from China (fiberglass, FOB). The customs decided that the declared value was undervalued, so it decided to adjust both declarations and issued refusal cards.

What they did. We proved that the declarant provided a full package of documents under Article 53 of the Customs Code (contract, specification, invoice, bill of lading, payment documents), and the customs did not provide a reasoned justification for the use of the reserve method and did not explain the adjustments for the volume of the consignment and commercial conditions.

Result. The court canceled the decision on adjustments and refusal cards. The overpaid customs duties were refunded.

Case 2. Closing the proceedings on fuel and lubricants when changing the UKTZED code

Situation. The customs changed the UKTZED code to a batch of construction materials and drew up a protocol under Art. 485 of the CCU (customs evasion). The declarant was accused of providing false information to determine the code.

What they did. We proved the absence of intent as a mandatory element of the offense under Art. 485 of the CCU.

Result. The proceedings were closed. The goods were returned to the declarant.

 

Case 3. Cancellation of a tax violation notice for UAH 12 million based on the results of a customs audit

Situation. After a documentary inspection, the customs office charged the importer UAH 12 million (duty + VAT) for the allegedly unlawful use of the privilege.

What they did. We went through all three court instances and proved that the company had the right to apply for the benefits when importing the goods in question.

Result. The court canceled the tax violation notification letter in full. The Supreme Court confirmed the correctness of our position.

 

Case 4. Closing the case on fuel and lubricants due to an error in the certificate of origin

Situation. The declarant submitted for clearance a consignment of goods with preferential treatment. Due to a technical error in the certificate of origin (a mismatch in the brand of goods), the goods were cleared without preference – but the customs still drew up a protocol on the fuel and lubricants.

What they did. We filed a motion to close the proceedings. They proved that: the goods were actually registered without preference (i.e., the payments were paid in full), the correct certificate exists, the error was technical in nature and did not indicate an intention to evade payment.

Result. The proceedings were closed due to the absence of an offense.

 

Send the decision to the customs office – we will assess the prospects of appealing for free.

Phone: +38 093 722 56 33 | Email: fo@fedoryshyn.com

When we say no

• We do not take on a case if we see that the chances of success are minimal.
• An honest assessment at the start is not a refusal to help. It is respect for your time and money. If we take a case, it means we see real reasons for the result.

Frequently asked questions

How long is the appeal period?

Depends on the type of decision. Administrative appeal of the decision on customs value adjustment – 10 working days from the date of receipt (Article 24 of the CCU). Judicial appeal – 6 months (Article 122 of the CAPU). In any case, the sooner you apply, the more remedies you have.

How much do your services cost?

The cost depends on the complexity of the case. A preliminary assessment of the situation is free of charge. After analyzing the documents, we will name a specific amount.

Can you guarantee the result?

No, we don’t. The rules of attorneys’ ethics prohibit us from guaranteeing the outcome of a legal dispute, and we do not do so. What we do guarantee is an honest assessment of the prospects before starting work, conscientious handling of the case and full transparency about the course of the process.

Is it necessary to go through an administrative appeal before a court?

For decisions on customs value adjustment, no, you can go straight to court. As practice shows, an administrative appeal is not always an effective way to protect yourself.

Do you work only with large companies?

No, we don’t. We work with businesses of all sizes, from sole proprietorships to large-scale manufacturing. The key criterion is the existence of grounds for appeal, not the size of the company.

Customs authorizations

In addition to disputes, we also support clients in obtaining customs authorizations, which are permits that grant special rights to a company in customs procedures. In the recent period, we have successfully obtained:

• Customs broker authorizations – permits that give the right to represent the interests of importers before the customs authorities
• Authorization to use a general guarantee – a company can use one financial guarantee to ensure payment of customs duties for several transactions
• Authorizations for the use of special type seals – the right to apply their own seals to vehicles and containers instead of customs securities
• Authorization for the simplified declaration procedure – the ability to submit a customs declaration with a reduced amount of information with the subsequent submission of an additional declaration
• Authorization for the procedure of release at the location – the company receives the right to clear the goods in its own warehouse without the need to deliver them to the customs post

The process of obtaining authorization involves interaction with the State Customs Service, preparation of documents, confirmation of compliance with the criteria and passing an inspection by the customs authority. We support the client at every stage – from preliminary assessment of readiness to obtaining a decision.

 

Time limits for appeal are limited

Administrative appeal of the decision to adjust the customs value takes 10 business days. For other decisions, the timeframe may be even shorter. If you have received a customs decision that you do not agree with, send it for analysis. The preliminary assessment is free of charge.

 

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

Fedoryshyn & Partners

Author: Maryna Pokotylo, Partner at F&P

After receiving a tax assessment notice, most entrepreneurs are faced with a choice: file a complaint with the State Tax Service or go straight to court. The Internet is full of advice of both types. Some say: “an administrative complaint is a waste of time, the STS never reverses its own decisions”. Others: “go through the administrative procedure first, it’s free and gives additional benefits”. The truth, as always, depends on the circumstances of a particular case.

In this article, we will analyze not the general theory, but the specific logic of decision-making: in which cases an administrative complaint makes practical sense, when it is harmful, and what has changed in the position of the Grand Chamber of the Supreme Court regarding the appeal deadlines in 2025.

What happens to the money while you appeal

This is the first thing you need to understand, because it is the key to the right decision.

While the TND is under administrative appeal, the monetary obligation is considered to be inconsistent (para. 56.15 of the TCU). This means: The STS cannot collect the money by force, cannot send a tax demand, cannot apply a tax lien. The filing of a complaint automatically ‘freezes’ the execution of the tax violation notification letter.

The same thing happens when going to court: the monetary obligation remains unreconciled until the court decision enters into force (clause 56.18 of the TCU).

However, there is a critical point: there is a period of time between the completion of the administrative appeal and the filing of a lawsuit in court when the obligation becomes agreed upon. On the day you receive the STS decision on the complaint, the procedure is considered completed, and from that moment on, you have 10 business days to pay the amount – or file a lawsuit and freeze it again. If you miss this point, the STS has the right to start collecting.

Deadlines: what the Grand Chamber of the Supreme Court has changed

The issue of time limits for appealing against a tax violation notification letter has been controversial for years. The TCU contains three different provisions regulating these terms, and they do not fit together:

• CLAUSE 56.19 OF THE TCU: 1 month after completion of the administrative procedure (if a complaint was filed with the STS)
• Article 122 of the CAPU: 6 months from the date of learning about the violation of rights (if no complaint was filed)
• Article 102 of the Tax Code: 1095 days (statute of limitations)

In its ruling of 16.07.2025 in case No. 500/2276/24, the Grand Chamber of the Supreme Court put an end to the situation: clause 56.19 of the Tax Code is a special rule and has priority. That is, if you have passed an administrative appeal, you have exactly one month to file a lawsuit. Not 1095 days, not 6 months – one month. And 1095 days from Art. 102 is the statute of limitations for preserving the right, not the time limit for filing a lawsuit.

If you have not filed a complaint with the STS, you have 6 months under Art. 122 of the CAPU.

Practical conclusion: if you choose to file an administrative complaint, be prepared to file a lawsuit within a month of receiving the response. If you are not sure that you will have time, it is better to go to court immediately and have 6 months.

When an administrative complaint makes sense

You want to see the reasoning of the State Tax Service. The response to the complaint is essentially the STS’s position in writing. You will find out what they will rely on in court and will be able to prepare counterarguments in advance.

The amount is small, and the case is simple. There are cases when the STS actually cancels a tax violation notification letter at the stage of administrative appeal. Usually, these are technical errors, arithmetic inaccuracies, or situations where the inspector has gone beyond his authority so obviously that even the STS recognizes it.

You want to buy time. The administrative appeal procedure takes 20 business days (+ extension to 60 days if the STS sends a notice). All this time, the money is frozen. For businesses that need time to prepare for court or resolve other issues, this can be a tactical advantage.

When you need to go to court right away

The amount is significant, and the risk of recovery is real. If it is a matter of millions of hryvnias and you are not sure that you will have time to file a lawsuit within a month after the administrative appeal, do not take any risks. Go to court right away.

The case is complex and requires a full judicial investigation. An administrative complaint is considered by the STS without the participation of the taxpayer, without questioning witnesses, and without requesting evidence. A court is a full-fledged process where you can file a motion to request documents, engage an expert, and question STS officials.

10-day window: the most dangerous moment

Upon completion of the administrative procedure, the monetary obligation is considered settled. The taxpayer has 10 business days to pay (clause 57.3 of the Tax Code). If you do not pay and file a claim within these 10 days, the State Tax Service has the right to start collecting: send a tax claim, apply a lien, initiate the seizure of assets.

Therefore, if you have chosen the path of an administrative complaint, you need to have a statement of claim ready by the time you receive a response. Do not start preparing it, but have it ready. Otherwise, you risk finding yourself in a situation where the 10-day period expires and the claim has not yet been filed.

Objections to the inspection report: the zero stage that everyone forgets

Even before the TND, at the stage of the audit report, the taxpayer has the right to file an objection within 10 business days (clause 86.7 of the Tax Code). This stage is often ignored – in vain. An objection forces the STS to either reject your arguments (and then you see their position) or partially admit mistakes (and reduce the amount of the TND). In addition, objections document your position, which is useful both for an administrative appeal and for the court.

The ideal strategy is: objection to the act → administrative complaint (if it makes tactical sense) → lawsuit. At each stage, you should document your position and arguments in writing.

 

Do you have a similar situation? Send us your documents and we will analyze your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

 

Author: Anastasia Holovatyuk, Lawyer at F&P

For many entrepreneurs, the suspension of tax invoice registration comes as an unpleasant surprise. You have made a real business transaction, drawn up a tax invoice, sent it for registration in the Unified Register of Tax Invoices, and received a receipt of suspension. Your buyer cannot form a tax credit, and you face a fine for late registration. At the same time, you have not committed any violation.

This situation is widespread. According to the State Tax Service, in 2024, about 1.4% of all invoices were stopped, and by the beginning of 2025, this figure had dropped to 0.9%. It may seem like a small amount, but for a particular business that has had an invoice for several million hryvnias blocked, statistics are little consolation. Let’s analyze how the system works and what to do at each stage.

How the SMKOR system works: why your invoice was stopped

The Risk Assessment Criteria Monitoring System (RACS) checks each tax invoice automatically at the time of submission for registration. The procedure for this check is defined by the Resolution of the Cabinet of Ministers of Ukraine No. 1165 dated 11.12.2019 (as amended, the most recent ones are Resolution No. 1187 dated 18.10.2024 and No. 1048 dated 26.08.2025).

The waybill goes through several stages of verification. First, the system checks whether it falls under the criteria for unconditional registration (clause 3 of Order No. 1165). For example, if the volume of supply in the current month is less than UAH 1 million, the invoice is usually registered automatically. If not, the system checks the payer for compliance with the risk criteria (Annex 1) and the transaction for compliance with the risk criteria of the transaction (Annex 3).

If the payer or the transaction meets at least one risk criterion, the registration is suspended. However, there is an exception: if the payer has a positive tax history (meets the indicators from Annex 2), the suspension does not occur even if the transaction risk criterion is triggered.

In practice, the most common cases where invoices are suspended are in such cases:

• The payer has recently been registered as a VAT payer
• The volume of the transaction is significantly higher than usual for this payer
• The supplier shows signs of risk (even if you are not aware of it)
• The VAT payer data table is missing or not accepted
• The transaction falls under the risk criteria for UKTZED or DKPP codes

Step 1: Receive a receipt – analyze it

A suspension receipt is not a sentence. It is the beginning of the procedure. The receipt should indicate which criterion was triggered, the calculated values of the indicators, and the STS’s proposal to provide explanations and documents. Read it carefully: your further strategy depends on which criterion was triggered.

There are often situations when the receipt contains a general wording without specifics – “meets the criterion of riskiness of transactions” without explaining which one. This may already be grounds for appeal, as the Supreme Court has repeatedly stated that the decision of the supervisory authority must be motivated with specific grounds.

Step 2: Submit explanations and documents

You have the right to submit an explanation with copies of documents confirming the reality of the transaction. The deadline is 365 calendar days from the date of suspension, but you shouldn’t delay: your counterparty is waiting, and the penalty for late registration is calculated from the first day of the delay.

What to submit: contract, acts, invoices, bill of lading, payment orders, certificates, specifications – anything that proves that the transaction actually took place. The limit is 100 files, each up to 2 MB, in PDF, PNG or JPG format.

Practical advice: don’t limit yourself to the minimum. Attach warehouse documents, photos of the goods, and correspondence with the counterparty. The more evidence of reality, the less likely you are to be rejected. However, the explanations should be clear and structured, not a chaotic set of files.

Step 3: VAT payer data table

If you have not yet submitted a data table, submit it along with your explanations. The table informs the State Tax Service about the types of your activities and the range of goods/services. If the table is accepted, a significant part of your invoices will continue to be registered without stopping.

However, there is a caveat: the percentage of rejections of the tables remains high. According to the State Tax Service, in December 2024 it was 52.2%, in February 2025 it dropped to 38.7%. That is, almost every third table is returned. Most often, the reason is insufficient detail in the explanations or inconsistency of the NACE/ NACE codes with the actual activity. If the table is not accepted, it can also be appealed.

Step 4: Commission decision – refusal or registration

Your invoice, together with explanations and documents, is reviewed by the commission of the supervisory authority. The review period is 5 business days (clause 44 of Procedure No. 520). The commission makes one of two decisions: to register or to refuse.

If you are denied, it is important to analyze the decision. The Supreme Court has consistently supported the position that the decision to refuse must be motivated. Wording such as “failure of the taxpayer to provide copies of primary documents confirming the information specified in the TI/CA” without specifying which documents are missing is grounds for reversal in court. This is a well-established position, which is confirmed by numerous rulings of the Supreme Court.

Step 5: Administrative appeal

A complaint against the decision to refuse can be filed with the STS within 10 business days (clause 56.3 of the TCU, taking into account the peculiarities of martial law). The complaint is submitted in electronic form. It may be accompanied by documents – but no more than 100 files.

To be honest, the chances of satisfying the complaint at this stage are slim: The STS rarely overturns the decisions of its own commissions. But this step has a tactical value: first, you record your position, second, you exhaust the pre-trial procedure (although it is not mandatory), and third, you receive an official response, which can then be used in court.

Step 6: Filing a lawsuit with the administrative court

Judicial appeal is the main tool of defense. A lawsuit is filed with the district administrative court. If you have passed the administrative procedure, the deadline for filing a lawsuit is 1 month after the completion of the administrative appeal. If you did not go through the administrative procedure, the deadline is 6 months.

In the statement of claim, you should ask to recognize the decision to refuse as unlawful, cancel it and oblige the State Tax Service to register the tax invoice in the Unified Register of Tax Invoices. The court evaluates not only your documents, but also the legality of the commission’s actions: whether the decision was motivated, whether specific grounds were provided, whether the procedure was followed.

The practice of the Supreme Court is quite positive for taxpayers. The court has repeatedly stated that the controlling authority must specifically indicate which documents are missing or which information is unreliable. General wording is not a proper motivation for refusal.

When to hire a lawyer

At the stage of submitting explanations and documents, many entrepreneurs do it on their own or with the help of an accountant. And that’s fine – if the transaction is simple, the documents are in order, and you already have experience with this procedure.

But if you are denied and the case goes to court, it’s a different story. Preparation of a statement of claim, formulation of claims, justification of interim relief, representation in court – all this requires legal expertise. A mistake at this stage can cost you not only a blocked invoice, but also a fine for late registration.

We specialize in tax disputes and have experience in appealing against decisions of the State Tax Service commissions, both administratively and in court. If your invoice has been suspended or you have received a refusal, send us a receipt and the commission’s decision. We will analyze the situation and tell you which strategy is optimal in your case.

 

Do you have a similar situation? Send us your documents and we will analyze your prospects for free.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

Author: Aliona Yevtushenko, lawyer at F&P

Receiving a notification in your personal account of the Register of Declarations that your declaration has been selected for a full audit is a stressful moment, to put it mildly. Especially if you are not very sure that you have declared everything correctly. But panic is the worst advisor. A full audit is a procedure with clear rules, deadlines, and boundaries. And knowing these rules is your main defense tool.

On the NACP’s website, we have already written about what the NACP pays attention to during full inspections. This article is about something else: what you, as a declarant, should do if the audit has already begun or you are assessing the risk of it starting.

How the NACP selects declarations for verification

Since 2024, the NACP has been working on a risk-based approach. This means that it does not check everyone, but only those with discrepancies identified by the system. The NACP has access to dozens of state registers: real estate, vehicles, bank accounts, legal entities, and court decisions. The system automatically compares data from the declaration with these registers. If there is a discrepancy, the declaration is put on the “attention zone”.

In addition to the automatic analysis, the basis for the inspection may be a report from a whistleblower, a journalistic investigation, or information from law enforcement agencies. But in any case, the inspection has a formal basis and procedure.

Verification procedure: step by step

Message. The next day after the start of the audit, the NACP notifies the declarant in their personal account. From that moment on, you officially know that you are being audited.

Request for documents. The NACP has the right to request copies of documents confirming the accuracy of the information in the declaration. This may apply to any section: property, income, accounts, corporate rights. You are obliged to provide these documents. Refusal is not the best strategy.

Timeline. A full audit is conducted within 120 days from the date of its commencement. This period may be extended for another 60 days, but not more.

Result. Based on the results of the audit, the NACP draws up a conclusion. If inaccurate information is found in the amount of more than 100 PM, the materials are sent to law enforcement agencies (NABU, police, prosecutor’s office – depending on the subject). If there are signs of unjustified enrichment or a discrepancy between the standard of living and the declared income, this may be grounds for civil forfeiture.

Strategy of behavior during the audit

The first rule is to cooperate, but in a deliberate way. It is your responsibility to provide documents. But you need to provide them carefully. Each document you submit should confirm your position, not create new questions. Before responding to the NACP’s request, analyze what exactly is being requested, what documents you have, and whether they have any discrepancies with the declaration.

The second rule: do not wait for a request – submit an explanation first. If you know that there is an inaccuracy in the declaration (for example, you noticed an error after submitting it), submit an explanation in the e-cabinet before the NACP asks for it. The verification procedure directly stipulates that explanations submitted before the start of the verification should be taken into account.

Third rule: distinguish between inaccuracy and unreliability. This is a key distinction. Inaccuracy (up to 100 PM) is a disciplinary action. Inaccuracy (more than 100 PM) is administrative or criminal liability. Your task is to substantiate as much as possible that any discrepancy is an inaccuracy: a technical error, rounding, use of a different exchange rate, and not a deliberate concealment.

The fourth rule: involve a lawyer in responding to the request. This is not a matter of prestige. The response to the NACP’s request is essentially your testimony, which can then be used in administrative or criminal proceedings. Incorrect wording can turn inaccuracy into unreliability. A lawyer will help you structure the answer correctly and avoid self-incrimination.

What does the NACP check specifically

Based on the analysis of inspection practice, the main areas are as follows:

• Real estate: whether everything is declared, whether the area and value correspond
• Vehicles: the presence of undeclared cars (especially those registered in the name of family members)
• Bank accounts and balances: comparison with NBU data
• Income: whether the declared income corresponds to the information from the tax authorities
• Corporate rights: participation in LLCs, shares, stocks
• Expenses: whether the declared expenses exceed the declared income (signs of unjustified enrichment)
• Property and accounts abroad

Separately: the risk of civil forfeiture

This is a relatively new tool that the NACP is increasingly using. If the audit finds that the declarant has assets that are not supported by legitimate income, the NACP may initiate a procedure to recognize the assets as unjustified and recover them for the state. This is a separate legal process, but it is directly related to the full verification of the declaration.

This risk concerns not only top officials. In 2025-2026, the NACP filed several lawsuits against mid-level officials. Therefore, it should not be underestimated.

When to contact a lawyer

Ideally, before filing your tax return if you have a complex asset structure, foreign elements, or doubts about the definition of family members. Realistic – immediately after receiving a notification of the start of the audit. Absolutely necessary – before responding to the NACP’s first request.

Our firm has experience in supporting declarants during full NACP inspections, preparing explanations and defending them in administrative and criminal proceedings related to declarations. If you have any questions about filling out the declaration or have already received a notice of inspection, please contact us. The earlier, the more opportunities for defense.

 

Need help with declaration or protection during NACP inspection? Don’t hesitate to contact us.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

Did you receive a tax violation notification letter after an audit? Did the Commission suspend the registration of tax invoices? Included in the list of risky ones? We have been working with such cases every day for the past 10 years, and we know how the State Tax Service justifies its decisions and where the typical weaknesses in their arguments lie.

Fedoryshyn & Partners specializes in tax and customs law. Our practice is built on two principles: deep specialization and focus on a specific result for the client – not on the number of consultations provided, but on solving the problem.

Need an assessment of the situation?

Send your documents and we will analyze your prospects for free within 1-2 business days.

+38 093 722 56 33 | fo@fedoryshyn.com

From the practice of Fedoryshyn & Partners

Over the years, we have handled hundreds of cases in tax disputes of various sizes – from appealing against fines for individual entrepreneurs to multi-million dollar tax violation notices for large taxpayers. Below are some examples.

Appeal against a tax violation notice for UAH 7.9 million – audit of the Office of Large Taxpayers

The Office of Large Taxpayers of the State Tax Service conducted a scheduled on-site inspection of a manufacturing company. As a result, an act was drawn up, which recorded the understatement of income tax and VAT. Based on the report, three tax violation notices were issued totaling UAH 7.9 million.

We analyzed the act and found that the STS’s conclusions were based on formal discrepancies in the primary documents, while the reality of the business transactions was confirmed by a full chain of documents – from contracts to acceptance certificates and bank statements. A lawsuit was prepared to the administrative court.

Result: all three tax violation notices were recognized as unlawful and canceled.

Appealing against a tax assessment notice on income tax: importer, foreign economic operations

The State Tax Service conducted a documentary scheduled audit of a company that carries out a full production cycle and purchases packaging from a counterparty in Turkey. The tax authority decided that the costs of prepress and typographic equipment setup were “not economically justified” and charged UAH 234 thousand in additional income tax.

At the stage of administrative appeal, the STS partially canceled the TND, recognizing the insufficiency of the evidence base for a number of counterparties. As for the rest, we prepared a lawsuit in which we proved that prepress costs are an integral part of the production cycle and are confirmed by contracts, acts and bank documents.

Result: The tax violation notice was canceled in full.

Appeal against a fine of UAH 23.7 million: actual inspection of the store

During the actual inspection of the store, the STS conducted a controlling settlement transaction and found that the entrepreneur allegedly did not keep records of inventory. The reason was the sale of sunglasses, which the tax authority classified as “medical devices”. On this basis, a tax violation notification letter was issued with a fine of UAH 23.7 million.

We appealed the decision, building our arguments on several levels: sunglasses are not a medical device within the meaning of the relevant legislation; the entrepreneur is not included in the list of entities required to keep commodity records; the inspection was beyond the scope of factual inspection; the grounds for its appointment were not proven.

Result: The court declared the tax violation notification letter unlawful and canceled it in its entirety.

Unlocking 8 tax invoices for an importer of industrial equipment

The Commission for Suspension of Registration suspended the registration of 8 tax invoices and adjustment calculations of a company that imports ventilation equipment from a German manufacturer and supplies it to Ukrainian buyers. The reason was that the UKTZED codes of the goods were missing from the VAT payer’s data table.

For each invoice, a separate package of explanations was prepared with complete primary documentation: a foreign economic contract, customs declarations, contracts with buyers, and invoices. After the commission’s refusal, a lawsuit was filed to recognize the decisions as unlawful and to oblige them to register the invoices.

Result: All 8 invoices were registered by court order.

Appeal against 11 decisions of the State Tax Service in the amount of more than UAH 1 million: unscheduled inspection of individual entrepreneurs

The STS conducted a documentary unscheduled audit of an individual entrepreneur after he had ceased his business activities. As a result, 11 decisions were issued – tax violation notices, debt payment requests and decisions on imposing fines – totaling more than UAH 1 million (personal income tax, VAT, unified social tax, military duty, penalties).

Підприємець дізналась про донарахування лише після відкриття виконавчого провадження – жодних повідомлень від ДПС вона не отримувала. Ми підготували позов, оскарживши всі 11 рішень, та обґрунтували порушення процедури повідомлення платника та неправомірність нарахувань.

Result: All 11 decisions of the State Tax Service were recognized as unlawful and canceled. The enforcement proceedings were closed.

Is your situation similar to one of the above?

Send us an inspection report, tax violation notice or commission decision – we will assess the prospects for appeal within 1-2 business days. It is free and does not oblige you to do anything.

+38 093 722 56 33 | fo@fedoryshyn.com

Areas of practice in tax disputes

Appealing against tax assessment notices

TND is the main tool used by the State Tax Service to record additional charges. In-house, documentary, and factual audits – each may result in a tax violation notice with which you disagree. We analyze the tax audit report, prepare objections, go through an administrative appeal to the State Tax Service of Ukraine and, if necessary, conduct the case in court at all instances. We work with tax violation notices for income tax, VAT, personal income tax and unified social tax.

Suspension of registration of tax invoices

A blocked invoice is an unregistered tax credit for your buyer. A situation in which the counterparty does not receive a credit through your fault undermines trust and creates a risk of losing a partner for future deliveries. We prepare explanations and a full package of documents for the commission. If the commission refuses, we appeal in court. In our practice, in the vast majority of cases, registration can be restored – the question is at what stage.

Exclusion from the list of risky payers

Inclusion in the risky list means a de facto blockade of VAT work: every invoice will be stopped automatically. We prepare a table of the VAT payer’s data, appeal against the commission’s decision, and, if necessary, go to court.

Support of tax audits

The participation of a lawyer at the inspection stage is not a formality. We analyze the inspection order, monitor compliance with the procedure, record violations and prepare objections to the act. This significantly reduces the risk that the act will contain conclusions that will have to be challenged for months.

Tax debt, fines and claims of the State Tax Service

Tax claims, penalties, unified social tax charges, seizure of funds – all of these are appealable. If the State Tax Service has accrued a debt that you do not agree with or has imposed sanctions in violation of the procedure, there are grounds for defense.

When we don’t take a case

We do not take cases for the sake of process. If, after analyzing the documents, we see that the client’s position is objectively weak – for example, the reality of the transactions is not confirmed by documents, or the violation really took place – we say so directly. Sometimes the right strategy is not to appeal, but to negotiate an installment plan or minimize the consequences in other ways.

Our goal is the best possible result for the client, not litigation as an end in itself.

How to work

1. Analysis of the situation. You send the documents in any convenient way. Within 1-2 business days, we study the materials and provide a preliminary assessment: prospects for appeal, optimal strategy, estimated timeframe and cost. This stage is free of charge.
2. Making a decision. Based on the analysis, you decide whether we proceed. We communicate openly if we consider the position to be weak or if an appeal is inappropriate.
3. Execution. Preparation of procedural documents, representation of interests in the State Tax Service and courts at all instances. We work throughout Ukraine through the Electronic Court.
4. Feedback. At every stage, you are informed about the progress of the case. You always understand what is happening and what the next steps are.

About Fedoryshyn & Partners

Fedoryshyn & Partners specializes exclusively in tax and customs law. This is not just one of the areas of our broader practice – it is the only thing we do. More than 10 years of work in this area means that we know not only the legislation, but also the law enforcement practice: how the State Tax Service justifies its decisions, which arguments work in court and which do not.

Our clients include importers, manufacturing companies, IT businesses, large taxpayers and individual entrepreneurs. The geography of the practice covers the whole of Ukraine.

We assume that a client comes to us to solve a specific problem, not for a legal lecture. That’s why we speak in clear language: what are the risks, what can be done, what is the most likely scenario, and how much it will cost. Preliminary analysis of documents is free of charge.

Frequently asked questions

1. What are the deadlines for appealing a tax violation notice?

Administrative appeal (complaint to the State Tax Service of Ukraine) – 10 business days from the date of receipt of the tax violation notification letter. Filing a complaint within this period suspends the fulfillment of monetary obligations for the duration of the review. Court appeal – 1 month after the administrative procedure is completed, or 6 months without it. As for certain categories of decisions, the Supreme Court case law allows for a period of 1095 days (Article 102 of the TCU), but this position is not uniform – you should not delay.

2. Is an administrative appeal to a court mandatory?

No. You can go to court right away. At the same time, the administrative stage is free of charge, suspends the execution of the tax violation notice and allows you to see the arguments of the STS, which is useful for preparing for court.

3. How much do the services cost?

The cost depends on the category of the dispute and the amount of additional charges. Preliminary analysis is free of charge. We agree on the exact price after reviewing the documents, before starting work.

4. Is it possible to appeal a TND if it has already been paid?

Yes. Payment does not terminate the right to appeal. In case of cancellation, overpaid funds are subject to refund.

5. Do you work only with large enterprises?

No, we don’t. We work with businesses of all sizes – from individual entrepreneurs to large taxpayers. The key criterion is the presence of grounds for appeal.

Time limits for appeal are limited

If you have received a tax violation notice, inspection report, decision to suspend registration or other document from the State Tax Service that you disagree with, send it for analysis. The preliminary assessment is free of charge.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

Fedoryshyn & Partners

Author: Viktoriia Staryk, lawyer at F&P

On March 31, 2026, the annual declaration campaign ends. By this date, every declarant – from a village council member to a deputy minister – must submit an annual declaration for 2025 through the Unified State Register of Declarations. There are less than three weeks left.

At first glance, the procedure is routine: open your account, fill in the sections, click “submit.” But it is this apparent simplicity that creates problems. Every year, the NACP finds thousands of declarations with errors, and some of them are subject to full audits that end in administrative or criminal proceedings. In 2024, the NACP resumed full audits in full, and this trend is growing.

This article is not a retelling of instructions from the NACP website. We will analyze specific mistakes in practice that actually lead to declarants being audited and explain where the line between inaccuracy and unreliability lies.

Mistake #1: “Not mine, but my mother-in-law’s” – ignoring the property of family members

One of the most common and dangerous mistakes. The declarant fails to indicate real estate, vehicles or bank accounts registered in the name of his/her spouse or persons with whom he/she lives together. In this case, a “family member” within the meaning of the Law “On Prevention of Corruption” is not only a registered spouse, but also a person who lives together, is bound by common life and has mutual rights and obligations (part 1 of Article 1 of the Law). A civil partner with whom you live together and run a common household is a family member for declaration purposes.

Practical advice: before filling out the declaration, make a list of all property, accounts, securities, and corporate rights of each family member. Ask them to provide bank statements. It is better to spend an hour on this than to explain yourself to the NACP later.

Mistake #2: Rounding and “approximate” amounts

The NACP distinguishes between “inaccurate” and “unreliable” information, and the line between them is 100 subsistence minimums for able-bodied persons. In 2026, this is UAH 332,800 (one subsistence minimum is UAH 3,328). If the discrepancy between the declared and the actual amount does not exceed this amount, it is an inaccuracy that can result in disciplinary liability at most. If it does, it is already inaccurate information, and a completely different story begins.

The problem is that “rounding” tends to add up. One bank account with a balance of UAH 50,000 was omitted, the cost of a car was rounded up by UAH 100,000, and income from renting an apartment was forgotten by UAH 80,000 – and the total discrepancy already exceeds the threshold of UAH 332,800. And if the amount reaches 500 subsistence minimums (UAH 1,664,000), this is already criminal liability under Article 366-2 of the Criminal Code.

Misconception #3: Cryptocurrencies and digital assets

This is an increasingly relevant topic every year. If the declarant or a member of his or her family owns cryptocurrency, it must be indicated in the Securities section (subsection “Other corporate rights”). The problem is that many people believe: “crypto is not regulated, so there is no need to declare it”. This is not the case. The NACP clearly states in its explanations that virtual assets are subject to declaration.

An additional difficulty is determining the value. The NACP recommends using the market rate as of December 31 of the reporting year. But which rate, from which exchange? There is no clear answer here, and this is a risk area: The NACP may estimate the value differently than you do.

Mistake #4: Income that has been “forgotten”

The “Income” section should include ALL income, including those that have already been taxed. A common mistake: the declarant does not indicate the salary, believing that “it is already in the tax office”. Or they do not indicate income from the sale of movable property, gifts, inheritance, interest on deposits.

Separately, there are cashback, bonuses, cashback from banks, and payments from insurance companies. These are also income, and they need to be reported. Yes, this applies even to the National Cashback if the amount exceeds the threshold for notification.

Mistake #5: Failure to submit a notice of significant changes

This is a separate obligation that is most often forgotten. If during the year you or a member of your family received income or acquired property in an amount equivalent to or greater than 50 subsistence minimums (UAH 166,400 in 2026), you must report significant changes in your property status within 10 days.

We bought a car for UAH 200,000 in August – the notification had to be submitted by the end of August. Failure to do so is a separate violation, regardless of whether you fill out the annual declaration correctly.

Error #6: Ignoring the “Data for the declaration” function

The NACP provides a tool that many people ignore – the Data for Declaration certificate. It is generated in the personal account and contains information that

The NACP already has information from the registers: real estate, vehicles, corporate rights, bank accounts. In fact, this is a cheat sheet from the NACP itself: they show what they already know about you.

If your declaration differs from this data, it is an automatic reason for attention during the audit. Therefore, I advise you to generate the certificate BEFORE filling out the declaration and compare it with what you plan to declare. Please note: the certificate can be generated only once per reporting period.

What to do if you have already filed a declaration with an error

The law provides for the possibility to submit a corrected declaration within 30 days after submission. This is important: if you notice a mistake, do not wait for an audit, correct it yourself. Timely correction significantly reduces risks. When conducting a full audit, the NACP takes into account the explanations submitted before the audit.

If the 30-day period has expired, you can send a letter to the NACP via your personal email account, explaining the reasons for the error and attaching supporting documents. This is not a guarantee, but it is much better than waiting for the NACP to identify the discrepancy on its own.

Scale of responsibility: from a warning to prison

A practical checklist before submission

• Make a complete list of property, accounts, and income of all family members
• Generate the “Data for the declaration” certificate and compare it with your data
• Check whether all notifications of material changes were submitted during the year
• Specify crypto assets, if any
• Don’t round up: provide exact amounts from bank statements
• Use auto-complete in the draft – it reduces technical errors
• After submission, read the declaration again. You have 30 days to make corrections

If you have a complicated situation – many objects, foreign assets, questions about identifying family members, or you have already received a notice of a full audit – contact a lawyer before filing, not after. It is much cheaper to correct a mistake than to defend against its consequences.

Need help with declaration or protection during NACP inspection? Don’t hesitate to contact us.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

Author: Olena Andriyko, lawyer at F&P

Starting from January 1, 2026, banks will pay income tax at the rate of 50%. The Law of Ukraine No. 4698-IX dated 3 December 2025 “On Amendments to the Tax Code of Ukraine on Peculiarities of Taxation of Banks in 2026” came into force without a transitional period, which is already creating practical difficulties for financial institutions that had made plans for the year based on the previous 25% rate.

Below is not a retelling of the law, but an analysis of what it really means: which provisions are the most painful, where the legislator has deviated from the logic of the windfall tax, and what those who work with or invest in banks should expect.

What has changed: three key rules

The law contains three independent changes that together have an effect that is significantly different from a simple doubling of the rate.

The first is a 50% rate on all profits. In accordance with the amendments to Article 136 of the Tax Code, the profit of banks for the reporting (tax) periods in 2026 will be taxed at a rate of 50%. There are no thresholds, no progressive approach – the rate applies from the first hryvnia of profit.

The second is the prohibition of loss carryforwards. In 2026, banks will no longer be allowed to reduce their taxable income by the amount of negative tax losses from previous years. This is the most stringent rule for institutions that have suffered losses as a result of the full-scale invasion – write-offs of impaired assets, provisions for loan portfolios in combat zones, and loss of branches. In 2026, such banks will actually pay income tax without being able to take into account their actual previous losses. The right to carry forward losses will be restored only in 2027.

The third is an advance payment when paying dividends. The 50% rate applies to the advance payment of income tax that the bank is obliged to pay before paying dividends. We are not talking about taxation of dividends in the hands of the shareholder – this is a separate mechanism provided for in subparagraph 57.11 of the Tax Code. But in practice, this means that any dividend payment in 2026 will initially “burden” the bank with an advance payment of 50% of the payment amount, which significantly affects the decision on profit distribution.

Is it a windfall tax – and why the answer matters

The government positioned this measure as an analog of the windfall tax, which is the taxation of excess profits. In fact, there is a fundamental difference between these concepts that goes beyond a terminological dispute.

The classic windfall tax is a tax on excess profit, i.e., the part that exceeds a certain basic level (usually the average profit for the previous 3-5 years). This approach was applied by the UK to energy companies after 2022, and by the EU to electricity suppliers. The logic is simple: the state participates in the distribution of benefits from external circumstances beyond the company’s control.

The rule introduced by Law No. 4698-IX has a different nature: it taxes all profit without exception, regardless of whether it is “excessive” in any sense of the word. A bank that earns a profit equivalent to the average pre-crisis level in 2026 will pay the same 50% as a bank with record-breaking performance. This is a simple rate increase for fiscal purposes, and it should be called that.

Why is this important in practice? Because the argument “you already earn too much” does not fit well with the situation of banks that have turned a profit after several unprofitable years, but still fall under the same rate. The legal construction of the law does not provide for any differentiation depending on the level of profitability.

The fiscal effect and the real burden

According to various estimates, the increased rate should bring in UAH 15 billion to more than UAH 20 billion in additional budget revenues. These figures are realistic given the financial results of the sector in 2023-2025 – banks did demonstrate sustainable profitability even under martial law, which was the main argument of the legislator.

At the same time, the real tax burden is higher than just a comparison of rates. The prohibition of loss carryforwards actually increases the tax base beyond the “cleaned” profit – for some banks, this means that the effective rate will exceed 50% of their economic result. For most businesses in Ukraine, the corporate tax rate is 18%; banks in 2026 will find themselves in a fundamentally different regulatory dimension.

Market implications: what is already happening

The rate hike is likely to affect banks’ behavior in several ways, and some of these changes are already evident in the first months of the year.

Lending activity. The reduction in post-tax profit directly reduces Tier 1 capital. This limits the ability to increase the loan portfolio – not because of a lack of desire, but because of the NBU’s capital adequacy requirements. Banks that had plans to expand lending in 2026 are forced to revise them.

Asset structure. Investments in government bonds, which have traditionally been an attractive instrument for banks in unstable periods, become even more attractive when the decline in lending profits is already “built into” the increased rate. It is possible that 2026 will be marked by a further increase in the share of government securities in bank balance sheets at the expense of corporate lending.

Dividend policy. An advance payment of dividends at a rate of 50% is a significant deterrent to profit distribution. We should not expect active payments to shareholders in 2026: most bank boards are likely to decide to reinvest profits.

Cost of services. Banks are commercial institutions and will pass on part of the tax burden to their customers, either through commissions, margins, or the cost of credit. How quickly and to what extent will depend on the competitive environment and the NBU’s regulatory stance.

What it means for your business

For companies that interact with the banking sector, whether as borrowers, partners or investors, the new rules have specific practical implications.

• Review loan agreements. Pay attention to the terms and conditions regarding the revision of the interest rate due to changes in the bank’s expenses. Some agreements contain such clauses, and an increase in the tax burden may be grounds for revising the loan price even under the current agreement.
• Bank shareholders will receive a separate analysis. If your company is a shareholder of a banking institution or plans to receive dividends from it in 2026, the mechanism of advance payment requires a detailed calculation before the decision on profit distribution is made. What looks attractive “before taxes” may change significantly “after”.
• For banks themselves, it is an audit of the tax base. If you have accumulated losses from previous years, you need to clearly understand their amount and legal nature: which ones are subject to the prohibition of carryforwards in 2026 and which ones can be taken into account from 2027. This has a direct impact on current tax planning and provisions.
• Review the sources of funding. If your business is heavily dependent on bank lending, 2026 is the time to evaluate alternative instruments: bond loans, leasing, and capital raising. Not because bank lending will disappear, but because its terms and availability may deteriorate.

Law No. 4698-IX is a wartime decision, and this must be recognized directly. The state needs resources, the banking sector makes a profit, and the mechanism for raising funds is obvious.

But there is a question that remains open and has legal significance: is this rate a temporary measure with a clear horizon, or will it become a new “norm” for the sector? The law is formulated as a norm for 2026, but the lack of a clear mechanism for returning to the base rates and the precedent of a gradual increase (from 18% to 25% and then to 50%) is a signal that the market is already reading.

For banks, their shareholders and corporate clients, the next few quarters will be a time of adaptation. Those who do so consciously – with a full understanding of the regulations and their implications – will have a significant advantage over those who simply “wait and see.”