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Author: Maryna Pokotylo, Partner at F&P

In today’s environment of increased attention to financial compliance and sanctions risks, businesses are increasingly facing situations where bank payments are suspended or do not go through at all. This can happen both in domestic banks and in foreign payment systems or in international transfers, and has its own legal grounds, consequences and algorithms for business.

Blocking a payment does not always mean a “ban” or a violation on the part of the client – it is more often the result of banks’ use of financial monitoring systems, AML/KYC checks and sanctions screening, which are mandatory requirements of both national and international law, as well as internal bank policies and correspondent bank requirements.

1. Causes of payment freezes

Compliance risks and internal monitoring systems of the bank. Commercial and international banks are required to control the movement of funds in accordance with AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements. This means that any payment may be stopped if the bank finds inconsistencies in the data, inconsistencies in the client’s profile or atypical transactions, inconsistencies in the transaction with the client’s normal business activities, or insufficient documentary evidence of the economic content of the transaction.

Sanctions risks arise if the payment is related to a counterparty that is potentially or actually on sanctions lists (national or international). In practice, the risk may also arise if the payment is linked to a sanctioned jurisdiction, correspondent bank, beneficiary, commodity or purpose that is subject to sanctions restrictions or screening triggers.Banks automatically block or suspend transactions that fall under sanctions regimes to avoid fines and loss of access to financial markets.

Incorrect details or incorrect payment data – for example, inaccurate SWIFT codes, incorrect company names, or inaccurate payment purpose are also very common causes of hang-ups, especially in international transfers, where automated verification systems are sensitive to formal inconsistencies.

2. How business should act: a clear algorithm of steps

1) Find out why the payment was blocked

The first step should always be communication with the bank servicing the account:

• Ask in writing, through which mechanism and on what legal grounds the payment was stopped.
• The request should contain clarifications:
  – which transaction is considered risky,
  – which data or transactions are suspicious;

– whether it is financial monitoring, sanctions screening, currency control, internal compliance checks, or a request from a correspondent bank.

The bank is obliged to provide justification or at least indicate which documents must be provided for verification, to the extent permitted by law and internal disclosure procedures.

 

2) Prepare a list of basic documents for the bank

To ensure that the payment is unblocked, the business needs to provide a clear legal and economic basis for the transaction. The standard list of documents includes:

1. Contracts and agreements with the recipient of funds (with translation if the payment is international), as well as additional agreements, specifications, orders, and other documents that specify the subject matter and terms of the transaction.
2. Invoices, certificates of work performed/services rendered (Invoice, Bill of Lading, etc.), shipping documents, customs documents (if any), transportation documents, certificates of origin or quality (if necessary).
3. An explanatory note setting out
   the purpose of the payment with a description of the economic content,
   compliance with the agreement and legislation (wording without legal jargon),
   the logic of the business transaction, its connection with the company’s core business, the grounds for choosing a counterparty, and the practical purpose of the payment.
4. Extracts from the registers, KYC documents of the counterparty, including statements on beneficial owners, ownership structure, registration documents, confirmation of the actual location and, if possible, absence of the counterparty from the relevant sanctions lists.
5. Documents confirming the legitimacy of the source of funds (financial statements, payment documents, budget certificates), as well as documents confirming the business purpose and financial capacity of the transaction.
6. If necessary: internal company documents (compliance policies, counterparty verification procedures, authorization questionnaire, due diligence results) if the bank requests confirmation of the appropriate level of internal control.

Tip: It is important to prepare all documents in the formats accepted by the bank and coordinate the list with the bank’s financial monitoring specialist in advance, as well as submit them in one structured package with a cover letter and a list of attachments.

 

3. Sanctions risks as a separate area of compliance

Sanctions compliance management is a separate branch of risk management that involves verification:

• whether the counterparty is on any sanctions lists (UN, EU, OFAC, etc.).
• whether it has any hidden beneficiaries related to sanctioned persons.
  
• whether the transaction or business structure does not create grounds for blocking payments due to sanctions risks;
• whether the payment goes through banks, jurisdictions or supply chains that may be classified by the bank as high-risk.

Even an unconfirmed suspicion about a counterparty can lead to a blocked transaction, and bank compliance systems often operate on the principle of “better to stop and double-check,” which, from a practical point of view, requires businesses to prepare an evidence base in advance regarding the transparency of the counterparty and the economic substance of the transaction.

 

4. What to do if the blocking lasts longer than the set time limit

If a payment is being blocked, it is advisable for businesses to act consistently and with proper documentation of each step.

In this situation, you should:
– contact the bank again in writing with a request to provide clarification on the status of the transaction and the list of documents required to complete the audit;
– clarify the stage of the review (internal audit of the bank, additional compliance analysis, review by a correspondent bank, etc.);
– submit documents in one structured package with a cover letter and a list of attachments;
– record all communication with the bank (letters, responses, requests, list of submitted documents, dates of sending and receiving).

If the bank does not provide a meaningful response or the audit continues without proper communication, it is advisable to proceed to pre-trial settlement:
– send an official complaint to the bank;
– contact the bank’s compliance/financial monitoring unit separately;
– if necessary, initiate consideration of the appeal through the bank’s management or the relevant customer complaints unit.

At the same time, it is important to note that in certain cases, a bank may be restricted from disclosing full information on the grounds for suspending a transaction due to the requirements of financial monitoring legislation and internal compliance procedures.

If there is no result after the pre-trial stage, the business may consider judicial protection of its rights, in particular, regarding the proper fulfillment of contractual obligations by the bank, provision of information within the scope of permissible disclosure and removal of unlawful restrictions on the transaction. In this case, a properly formed evidence base and a complete chronology of interaction with the bank will be of key importance.

 

5. Risk prevention: how to avoid problems with payments

• Implementing internal compliance in business is not a formality, but an effective mechanism to prevent the risks of blocking payments and other negative consequences.
• Regular checks of counterparties against sanctions lists and transparency of ownership structure significantly reduce the risk of delays, especially for international transactions, new counterparties, and atypical payments.
• Having a clear AML/KYC policy in place increases bank confidence and facilitates internal financial monitoring procedures, as well as reduces the time required to prepare a response to a bank’s request.
• It is practical to form a “compliance file” for key counterparties in advance: a package of registration, corporate, authorization and operational documents that can be promptly provided to the bank without wasting time.

 

Conclusion.

Compliance and sanctions risks have become an integral part of financial relations in modern business. If a payment is delayed, it is not the end of the world, but a signal to act: to analyze, prepare documents and communicate clearly with the bank. The key task of a business in such a situation is not only to formally submit documents, but also to provide proper legal justification for the economic content of the transaction, its compliance with the company’s business profile, and the absence of sanctions triggers. Legal support at every stage will help not only to unblock the transaction but also to create an internal system that will help avoid similar situations in the future.

Author: Anastasia Holovatyuk, Lawyer at F&P

In the context of martial law and the ongoing armed aggression of the Russian Federation against Ukraine, the sanctions regime has become one of the key instruments of international and national law. For Ukrainian businesses, compliance with sanctions legislation has ceased to be a formality and has become a mandatory element of due diligence. Sanctions screening of counterparties is now a component of basic compliance and a tool for managing legal and financial risks.

Insufficient or formal due diligence of counterparties may result in financial sanctions, asset freezes, termination of relations with banks, loss of access to international markets, and in some cases, criminal consequences for officials. That is why businesses need to have a clearly defined minimum standard of due diligence and properly record the decisions made.

The importance of sanctions screening for Ukrainian business

Sanctions screening involves checking counterparties, their beneficial owners and related parties for inclusion in sanctions lists or other restrictive measures. For Ukrainian companies, this is not only a matter of compliance with Ukrainian legislation, but also compliance with the sanctions regimes of the European Union, the United States of America and other jurisdictions with which they do business.

Recent practice shows that even an indirect connection with a sanctioned person may be grounds for a bank to refuse to provide services, block payments or terminate contracts with foreign partners. In the absence of a documented audit, it is difficult for a business to prove the good faith of its actions.

Legal and business effects of the implementation of sanctions screening

A systematic sanctions screening allows a company to reduce the likelihood of violating sanctions legislation and demonstrate due diligence in the event of inspections or disputes. For international partners and financial institutions, this is a signal of a mature level of corporate governance and risk control. In practical terms, this affects access to finance, participation in international projects, and the sustainability of the business model.

Minimum standard of sanctions checks

The minimum standard for sanctions screening should be based on a risk-based approach, where the depth of the check depends on the risk level of a particular counterparty. At the same time, even for low-risk transactions, a basic level of control should be ensured.

This standard usually includes:

1. Identification of the counterparty, its full legal name, registration data, location, and ultimate beneficial owners and managers.
2. Checks against current sanctions lists, including the sanctions lists of Ukraine, the European Union, the US OFAC and, if necessary, other international lists.
3. Analyzing the results of the check, taking into account possible false matches, similarities in names, transliteration, and corporate structures.
4. Formation of a conclusion on the admissibility or inadmissibility of cooperation with the relevant counterparty.
5. Regular review and re-verification of counterparties in the course of long-term contractual relations.

For certain sectors of the economy, such as financial, energy, and export-oriented businesses, such a standard is actually mandatory due to the requirements of banks and regulators.

Fixing decisions as a key element of protection

The existence of an audit without proper recording of its results does not ensure business protection. In the event of an audit or a dispute, it is not only the fact of screening that is crucial, but also the ability to prove how the decision was made and on the basis of what data.

In practice, this means a necessity:

1. approval of the internal sanctions compliance policy or counterparty verification procedure;
2. documenting each audit, including the date, sources used, results, and responsible person;
3. recording the rationale for the decision to start or continue cooperation, especially in cases of increased risk;
4. retaining relevant materials for a period sufficient to allow for internal or external audits;
5. periodic review of procedures and training of employees involved in the conclusion of contracts.

The use of automated screening solutions and centralized information storage greatly simplifies these tasks and reduces the risk of human error.

Practical recommendations for business

Companies should start by assessing their own sanctions risks, taking into account the geography of their operations, the structure of clients and counterparties. On this basis, they should implement a proportionate verification system, integrate sanctions clauses into contractual documentation, and ensure regular monitoring of changes in sanctions legislation.

Involvement of lawyers or compliance specialists at the stage of building the system allows you to avoid a formal approach and create a mechanism that actually works in operations.

Sanctions screening as an element of sustainable development

Sanctions compliance should not be perceived as a restriction for business. In Ukrainian realities, it is a tool for preserving business, protecting assets and maintaining trust on the part of partners and financial institutions. The integration of sanctions inspections into the corporate governance system is in line with both Ukraine’s national interests and generally accepted international standards for doing business in the context of heightened geopolitical risks.

 

Author: Aliona Yevtushenko, lawyer at F&P

In the context of Ukraine’s European integration, customs legislation is undergoing significant transformations. As of the beginning of 2026, following the entry into force of Law No. 3926-IX of August 22, 2024, businesses are facing new requirements that harmonize Ukrainian regulations with the EU Customs Code. These changes, effective from April 19, 2025, affect importers and exporters by introducing authorizations, tightening controls, and simplifying procedures. According to the Ministry of Finance, more than 70% of foreign trade companies are already adapting to avoid risks in 2026, when the transition period ends. This is not only a requirement of the EU, but also a tool to increase competitiveness, reduce bureaucracy and fight shadow schemes.

Why is the new version of the Customs Code important for Ukraine?

Harmonization with the EU is a key step towards full membership. The changes are aimed at increasing transparency, reducing corruption, and facilitating trade. For importers and exporters, this means new authorization rules that will replace the old permits. For example, an authorized economic operator (AEO) gets simplified access to the regimes, but must confirm its financial standing and the absence of sanctions. Without authorization, it will not be possible to use the import regimes for final use or processing from 2026. Ukraine aims to adopt a completely new EU-based Customs Code in 2026, as approved by the Steering Committee in March 2025. This will reduce the time for customs procedures by 30-40%, according to experts.

Key changes for importers and exporters

The changes affect several aspects:

Authorization system:

The State Customs Service issues authorizations for brokerage activities, operation of customs warehouses (CW) and temporary storage warehouses (TSW). The requirements include an impeccable reputation, the appointment of a responsible person, and compliance with the criteria of the Cabinet of Ministers. The old permits are valid until April 19, 2026, after which they will be canceled. For importers, this means mandatory authorization for temporary import or processing regimes if operations are regular.

Classification of customs warehouses:

Three types have been introduced: Type I (responsibility of the warehouse and regime holder), Type II (regime holder only), Type III (customs authority). This affects exporters who use warehouses for storage, requiring a clear division of responsibilities.

Customs representation:

A distinction is made between direct (on behalf of the client, the client is responsible) and indirect (on behalf of the broker, the representative is responsible). Importers and exporters may entrust the inspection of goods to other persons, but only they themselves. This strengthens control over brokers and reduces business risks.

Post-clearance control and audit:

Inspections for 1095 days have been extended, with electronic exchange of documents. Inspection plans are published quarterly. For exporters, this means enhanced monitoring of payments and declarations, but also the possibility of appealing electronically.

What are the business benefits of these changes?

For importers: simplified declaration at authorized facilities, reduced time for the release of goods. Exporters will get better access to EU markets through the unification of procedures, which will reduce costs by 15-20%. In general, authorized operators will have priorities in the eCheck and fewer inspections, increasing efficiency. In the post-war economy, this attracts investment, as Deloitte notes: businesses with AEO status have higher partner confidence.

Practical steps for businesses to adapt to changes

To prepare for 2026:

1. Audit current permits and submit them for authorization to the State Customs Service.
2. Appoint a person responsible for customs issues and check the financial situation.
3. Sign agreements with brokers, taking into account the type of representation.
4. Implement an electronic document flow for control.

We recommend that you contact a lawyer for support to avoid fines of up to 50% of the value of the goods for violations.

The state is implementing European integration through laws such as No. 3926-IX, which implements EU norms. A complete new version of the code is planned for 2026, with a schedule approved by the Ministry of Finance. This includes automation, like in NCTS, and anti-smuggling. Starting in 2025, large enterprises will be required to report on customs risks, similar to the EU taxonomy.

Conclusions

The new version of the Customs Code is a strategic necessity for importers and exporters. Adapting to the changes starting from April 2025 will allow businesses to reduce risks, optimize processes, and strengthen their positions in the global market by 2026. Do not ignore the transition period – it is a chance for sustainable growth. Our company is ready to provide advice for successful implementation.

Author: Olena Andriyko, lawyer at F&P

In today’s business environment, corporate liability of directors is becoming an increasingly relevant topic: regulatory requirements are growing, supervisory bodies are becoming more active, and courts are increasingly setting precedents for holding directors personally liable. At the same time, a frequent question arises: where is the line between lawful management and personal responsibility?

The most common legal form for doing business in Ukraine is a limited liability company (LLC).

This form of business activity attracts attention because it minimizes risks for the founders of the LLC.

At the same time, the director of an LLC plays a key role in conducting business activities and, as a result, bears the greatest risks of being held liable.

It should be noted that the LLC’s director is liable under the applicable laws of Ukraine, the LLC’s charter and the employment agreement.

Liability is provided for by the current legislation of Ukraine.

The following are the most common types of liability under the current Ukrainian legislation for which a director may be held liable:

1. civil liability. Such liability provides for legal consequences of a property nature in case of non-performance and/or improper performance of duties, in accordance with Article 92 of the Civil Code of Ukraine.

Some of the most common types of violations by LLC directors are the following:

1) violation of the transaction procedure;

2) exceeding the limits of authority;

3) unfair, unreasonable, negligent actions that harm the LLC (may be committed without violation of the procedure, within the limits of authority.

One of the practical cases of bringing a director of an LLC to civil liability by recovering material damage caused by the director’s unfair and unreasonable behavior is the court decision in case No. 902/183/22.

For example, in case No. 902/183/22, the Company recovered from the director of the LLC the damages caused by the director’s unfair, unreasonable behavior, contrary to the interests of the LLC. In the course of the case, the Company provided adequate evidence of the director’s unlawful behavior and the purchase of goods at an inflated cost, which convinced the three courts of law that the Company’s position was correct. In this case, the amount of property liability of the LLC’s director, which was recovered on the basis of a court decision, amounted to UAH 7,408,875.00.

(link to the decision of the cassation instance https://reyestr.court.gov.ua/Review/113035699)

2. administrative liability. The LLC director may be held liable for violating the requirements governing the activities of legal entities, in particular, tax legislation, labor protection, violation of financial reporting and accounting rules, etc.

In addition, there is currently a widespread practice of imposing administrative penalties on the head of an LLC for maintaining military records at the enterprise.

In particular, in case No. 686/3272/24, the Khmelnytsky City District Court of Khmelnytsky Oblast dismissed the claim of the head of an LLC to cancel the resolution on bringing to administrative responsibility for violation of military registration at the enterprise. The court found that the director’s actions constituted an administrative offense.

(link to the decision of the Khmelnytsky City District Court of Khmelnytsky region https://reyestr.court.gov.ua/Review/118739201)

3. criminal liability. A director of an LLC may be held criminally liable for offenses under the Criminal Code of Ukraine, in particular: tax evasion; fraud or misappropriation of company funds; negligence that caused serious consequences; fictitious bankruptcy or misuse of company assets; and corruption offenses.

Modern challenges for directors: risks and recommendations

• Uncertainty of the scope of action. In many cases, legislation and court practice have not yet defined the exact limits of liability – especially in new businesses, start-ups, or companies with non-standard structures.

• Procedural requirements. Failure to comply with formal procedures (e.g., for major transactions, shareholder notification, meetings, etc.) significantly increases risks.

• Confirmation of the standard of action. The director often has to not only prove the absence of criminal intent, but also demonstrate that his decisions were reasonable, based on analysis, expert involvement or internal audit.

• Corporate culture and internal policies. In the absence of corporate standards, corporate governance policies, or codes of conduct, a director finds himself in a more difficult position to justify his position in court.

• The growing role of ESG and integrity. Investors, funds and international partners are increasingly paying attention to the environmental, social and governance (ESG) aspects of business. Violations of integrity standards or lack of transparency may become additional grounds for claims.

• Low level of unification of judicial practice. Different courts may assess the same facts differently, which increases the risks for directors in different jurisdictions.

To reduce the risks, we recommend:

1. Implement internal corporate governance policies (e.g., committees, audits, inspections, decision-making standards).

2. Document the decision-making process (memoranda, conclusions, risk assessments).

3. Monitor compliance with the powers of authority and check whether the transaction exceeds the limits of competence without appropriate approval.

4. Engage external consultants or experts on complex or risky issues.

5. Monitor court practice and update your legal position taking into account the new conclusions of the Supreme Court and other cassation instances.

Conclusion.

The role of a director today is not only strategic management of the company, but also personal responsibility. Legislation is being filled with new requirements, courts are setting precedents, and businesses are setting expectations for integrity and transparency. Therefore, it is important for managers not only to act “within the charter” but also to build a management system that can protect them from legal risks.

As a law firm, we are ready to assist you with analyzing the personal liability of directors, developing internal corporate governance policies, and preparing legal defense in disputes. Contact us for advice or legal due diligence.

Author: Maryna Pokotylo, Partner at F&P

In the current economic environment, domestic government bonds remain one of the most attractive instruments for investors – individuals, legal entities, single taxpayers, and farmers. However, to avoid any surprises with tax liabilities, it is important to understand which income from domestic government bonds is taxable, which is not, and what changes in legislation are relevant as of September 2025.

Main regulatory sources

• The Tax Code of Ukraine (TCU), in particular Section IV of the TCU, Art. 162 (who is a personal income tax payer), Art. 165 (income not included in tax income) and the military fee subsection.

• Law of Ukraine “On Capital Markets and Organized Commodity Markets” No. 3480-IV.

• Resolution of the Cabinet of Ministers No. 80 of January 31, 2001 “On Issuance of Domestic Government Bonds” as amended.

• Official explanations of the State Tax Service (STS) and the Ministry of Finance.

What are government bonds?

Domestic government bonds (DGBs) are debt instruments issued by the Ministry of Finance of Ukraine to raise funds for the state budget. By investing in domestic government bonds, the buyer provides a loan to the state. In turn, the state guarantees repayment of the nominal value of the bond within a certain period of time and payment of income, which is usually accrued in the form of interest (coupon payments).

What is income from government bonds

The income that investors can receive from domestic government bonds is generally divided into:

1. Coupon income (interest) – if the bond provides for periodic payment of interest (coupons).

2. Investment income – is the difference between the proceeds from the sale (or redemption) of bonds and their acquisition cost (including acquisition costs, if any).

Peculiarities of taxation for individuals

In accordance with the Tax Code:

• Clause 165.1.52 of Article 165 of the TCU provides that investment income from transactions with government securitiesissued by the Ministry of Finance of Ukraine, including income from domestic government bonds (including exchange rate differences), is not included in the total monthly or annual taxable income of a resident individual.

• Interest income received by the taxpayer and investment income from operations with domestic government bonds are not subject to military duty in accordance with subparagraph 1.7 of paragraph 16-1 of subsection 10 of section XX of the Tax Code of Ukraine.

Thus, a resident individual who receives coupon income or investment income from transactions with domestic government bonds does not pay personal income tax and military duty on such income.

Peculiarities of taxation for legal entities

For legal entities, income from domestic government bonds is included in the pre-tax financial result, which is the basis for calculating income tax (18% rate under Article 136 of the Tax Code). Such income includes:

1. Coupon income: Periodic interest payments on coupon bonds. This income is accrued in accounting on an accrual basis (in accordance with NSAU 13 “Financial Instruments” or IFRS 9 if the entity applies international standards).
2. Investment income: The difference between the selling (or redemption) price of government bonds and their purchase price, adjusted for expenses (e.g., brokerage commissions or bank fees).
3. Income from discount bonds: The difference between the nominal value at maturity and the purchase price amortized at the effective interest rate.

 

Unlike individuals, for whom income from domestic government bonds is exempt from personal income tax and military duty (sub-clauses 165.1.2 and 165.1.52 of Article 165 of the Tax Code), legal entities include this income in their total taxable income.

 

Taxation features for single tax payers

Single taxpayers (individual entrepreneurs and legal entities under the simplified taxation system) should be particularly careful when dealing with domestic government bonds (OVDPs), as such transactions may have tax and legal consequences.

According to the position of the State Tax Service (ІПК № 44/ІПК/99-00-21-02-02/ІПК), the sale of domestic government bonds may be classified as financial intermediation, which is prohibited for single tax payers of groups 1-3 in accordance with subpara. 291.5.1 OF THE TCU. The legislation lacks a clear position on the possibility of purchasing domestic government bonds solely for income (without further sale). At the same time, in the classification of economic activities (KVED), securities transactions can be interpreted as the provision of financial services, which also falls under the prohibition of financial intermediation.

For legal entities on the simplified taxation system, participation in such transactions may result in the loss of the right to apply the single tax if the STS recognizes that they have violated the terms of the simplified taxation system.

Individual entrepreneurs (IEs) are entitled to purchase domestic government bonds as private individuals, provided they use personal accounts rather than business accounts and do not act on behalf of third parties. If these requirements are violated, the transactions may be regarded as financial intermediation, which may result in the loss of the single tax payer status.

One of the problems that has been actively discussed recently is that single taxpayer farmers of the 4th group, who have invested in military government bonds, face the fact that the State Tax Service takes into account the entire amount of repayment of government bonds (i.e., both nominal and interest) when determining total income. This may lead to a violation of the criteria (e.g., the share of income from agricultural activities that must be at least a certain percentage, e.g., 75%) and loss of the single tax payer status.
MPs and businesses are initiating amendments to the draft law No. 13420, which stipulate that when determining the share of income of a single taxpayer of the 4th group income (profits) from securities will not be taken into accountif such income includes income tax has been paid. This should reduce the risk of losing the special regime.

Conclusion

Domestic government bonds are an effective and most legal way to generate investment income, especially for individuals, as Ukrainian legislation exempts such income from personal income tax and military duty. However, for legal entities and single tax payers, there are nuances that can lead to risks if changes are underestimated or income is incorrectly accounted for. Careful analysis, legal support and attention to detail will help avoid undesirable tax consequences.

Author: Anastasia Holovatyuk, Lawyer at F&P

Introduction: Relevance of the topic in the context of modern customs regulation

In today’s global trade environment, imports of goods to Ukraine are an integral part of the economic activities of many business entities. However, along with the need to properly complete customs declarations and pay the relevant fees, special attention should be paid to compliance with the rules for determining the country of origin of goods. This is due not only to the requirements of the Customs Code of Ukraine (the “CCU”), but also to the increased control by government agencies in 2025. Ignoring these requirements may lead to significant negative consequences, including the imposition of fines in the amount of 50 to 100 percent of the value of the goods, confiscation of the objects of violation, as well as initiation of litigation or administrative proceedings.

According to the State Customs Service of Ukraine (hereinafter referred to as the “SCS”), in 2025 there is a tendency to increase the number of violations detected related to inaccurate information about the country of origin. This is due to both geopolitical factors and the introduction of new legislative control mechanisms. In this article, we will review the key legislative innovations, document requirements, statistics of violations, practical recommendations, case studies and conclusions based on the current regulatory framework.

Legislative innovations in the field of customs control over the country of origin of goods

In 2025, Ukrainian customs legislation underwent certain changes aimed at strengthening administrative liability and clarifying procedures. In particular, on March 25, 2025, the Verkhovna Rada of Ukraine adopted Law No. 4323-IX “On Amendments to the Customs Code of Ukraine and Other Laws of Ukraine on Certain Issues of Administrative Liability for Violation of Customs Rules”.

The key novelties are the separation of approaches to determining the amount of fines depending on the nature of the violation and the strengthening of sanctions for the use of fictitious documents or false information about the country of origin.

These amendments are aimed at harmonizing Ukrainian legislation with international standards, in particular with the provisions of the EU-Ukraine Association Agreement, and at preventing customs evasion through manipulation of the country of origin.

Documents confirming the country of origin of goods: legal requirements and verification procedures

Pursuant to Article 41 of the CCU, the country of origin of goods is determined based on the criteria established by international agreements and national legislation. The documents confirming the country of origin are:

1. A certificate of origin issued by an authorized body of the exporting country;
2. Certified declaration of origin;
3. A declaration of origin drawn up by a manufacturer or exporter;
4. Certificate of regional designation of origin.

The country of origin shall be declared in the customs declaration by indicating its name and a reference to the relevant document. In case of delivery of goods in batches in disassembled form, the country of origin is determined by the last batch, unless otherwise provided by the rules.

If the customs authority has doubts about the authenticity of the documents, an inspection is carried out after the customs clearance is completed. Such verification may include contacting the competent authorities of the exporting country and/or transit customs.

Violation statistics and control trends in 2025

An analysis of the SCS statistics shows that control over compliance with customs rules has intensified. In January-February 2025, about 1,467 cases of violations worth UAH 825 million were recorded. In the first half of the year (January-June), the number of violations increased to 4,873, worth UAH 6 billion. In the first seven months (January-July), there were 5,682 violations amounting to UAH 6.8 billion, and in the first eight months, there were 6,437 violations amounting to UAH 7.7 billion.

The main causes of violations include false information about the country of origin, the use of fictitious documents, registration through fake companies, and errors in the name, quantity, or value of goods. This often leads to evasion of anti-dumping or preferential duties. The growing trend of violations is associated with the strengthening of post-customs control and the introduction of automated inspection systems that allow for real-time detection of risks.

In practice, we note that the number of cases when the customs authorities of Ukraine suspect that the country of origin of goods is Iran or sanctioned countries has increased significantly, even in the absence of direct evidence. In such situations, customs often stops the goods for sampling and laboratory tests, which can take a considerable amount of time. At the same time, the customs authority addresses the customs authorities of transit countries and companies involved in the supply chain (manufacturers, carriers, freight forwarders) with inquiries about the origin of the goods. If indirect doubts arise during the inspection process (for example, discrepancies in transit documents or unconfirmed letters from logistics companies), the customs draws up a protocol on violation of customs rules and temporarily seizes the goods.

The court practice in such cases is ambiguous. On the one hand, the courts often side with importers, noting that there is no direct evidence of the falsity of the declared origin of the goods, and that the indication of the country of origin (e.g., Turkey instead of Iran) does not affect the amount of customs duties if the duty rates are the same and no preferences or prohibitions are applied.

On the other hand, a number of decisions show a negative trend: the courts support the position of the customs, even in the absence of conclusive evidence that the declarant has indicated an unreliable country of origin. This may be due to increased control due to geopolitical factors or assumptions about possible sanctions evasion. In such cases, courts rely on indirect data (e.g., information from automated systems or correspondence with transit companies).

Practical recommendations for importers: how to avoid risks

To minimize the risks, importers are advised to take the following measures:

1. Thoroughly check the documents: Before submitting a customs declaration, ensure that you have original or certified copies of certificates and declarations. Additionally, use packaging, technical documentation, and waybills to confirm origin.
2. Compliance with the procedures of the new legislation: To take into account changes in administrative liability and ensure that declarations comply with the requirements of the articles of the Commercial Code.
3. Responding to requests from customs authorities: In the event of a request for confirmation of origin, provide a reasoned response with copies of documents within the prescribed timeframe to avoid blocking goods.
4. Cooperation with reliable suppliers: Choose partners whose documents can withstand scrutiny and conduct due diligence on their reputation.
5. Engaging legal counsel at the stage of import preparation will help avoid common mistakes and optimize processes.

Conclusions: The strategic importance of compliance for business

Changes to the customs legislation of Ukraine in 2025 indicate a systematic strengthening of control over the determination of the country of origin of goods. These changes are aimed at protecting the national market, preventing smuggling and ensuring fair competition. For importers, a proactive approach is key: unification of documents, their thorough confirmation and readiness for inspections. Failure to comply can lead not only to financial losses (fines, confiscation), but also to reputational risks and restrictions on further business. Legal support, including consultations with customs law experts, is an effective tool for navigating these conditions and minimizing potential threats.

 

Author: Aliona Yevtushenko, lawyer at F&P

Introduction

In today’s world, where economic processes are becoming increasingly complex and market competition is growing every year, business cooperation is of particular importance. This mechanism allows companies to combine their efforts, resources, experience and technologies to achieve common goals, which contributes not only to their development but also to strengthening the economy as a whole. Business cooperation covers a wide range of forms of cooperation, from informal agreements to the creation of joint legal entities, and is an important tool for optimizing costs, increasing competitiveness and expanding market presence. In the context of globalization and rapid technological development, cooperation is becoming not only an opportunity, but also a necessity for companies seeking to remain leaders in their industries. The purpose of this article is to provide a detailed analysis of business cooperation, its legal basis, economic benefits, and challenges that may arise in the course of such cooperation, with a particular focus on joint ventures, mergers and acquisitions.

Concept and forms of business cooperation

Business cooperation is a voluntary association of several business entities to achieve common economic, strategic or technological goals. It can be implemented through a variety of forms that differ in terms of the level of integration, cooperation goals, and organizational structure. The main forms of cooperation include:

• Strategic partnerships – are agreements between companies aimed at cooperating in specific areas, such as joint product development, marketing projects, or technology exchange, without creating a new legal entity.
• Establishment of a joint venture company – Formation of a new legal entity, most often in the form of a limited liability company (LLC), where capital shares are distributed among several businesses. This allows the partners to jointly manage the business, share profits and risks.
• Franchising – is a model of cooperation in which one party (franchisor) transfers to another (franchisee) the rights to use its business model, brand or technology for a specified fee.
• Cooperatives – An association of individuals or business entities for the purpose of carrying out activities together, for example, in agriculture, trade, or services.
• Mergers and acquisitions – is a form of integration in which several companies are merged into one legal entity (merger) or one company gains control over the assets and operations of another (acquisition).

Each of these forms has its own unique features, which are determined by economic conditions, strategic goals of the parties, and legal regulations governing their activities. The choice of a particular form depends on the business needs, market situation and long-term plans of the partners.

Contractual basis for cooperation

Most forms of cooperation are based on contractual relations that clearly define the rights, obligations, and distribution of profits and risks between the parties. For example, joint venture agreements under Article 1130 of the Civil Code of Ukraine allow the parties to pool their resources to achieve a common goal without establishing a separate legal entity. In the case of a joint venture, the LLC agreements regulate in detail the distribution of shares, management and dispute resolution mechanisms. Such agreements are a key tool for ensuring transparency and stability of cooperation.

Antitrust regulation

Business cooperation, especially in the form of joint ventures, mergers or acquisitions, can have a significant impact on competition in the market. In Ukraine, these issues are regulated by the Law of Ukraine “On Protection of Economic Competition”. In particular, a merger of companies, if the aggregate market share of the parties involved exceeds certain thresholds, requires prior approval of the Antimonopoly Committee of Ukraine (the “AMC”). Such approval is necessary to prevent market monopolization and protect the interests of consumers. Failure to comply with these requirements may result in fines or the cancellation of the transaction.

Protection of intellectual property

Cooperation often involves the use of intellectual property, such as trademarks, patents, copyrights, or know-how. The legal protection of these assets is critical to ensure a fair distribution of benefits between the partners. Technology transfer agreements or license agreements must comply with the Law of Ukraine “On Protection of Rights to Trademarks and Service Marks” and international standards, including the TRIPS Agreement. Clear regulation of intellectual property rights helps to avoid conflicts and ensures the stability of cooperation.

Economic benefits of cooperation

Business cooperation opens up great opportunities for companies seeking to optimize their operations and strengthen their market positions. The main economic advantages include:

• Economies of scale – Pooling resources can reduce production, marketing, logistics, or research costs. For example, sharing warehouses or procurement facilities reduces production costs.
• Access to new markets – Cooperation with foreign partners opens up opportunities to enter international markets, which is especially important for companies seeking to expand their geographic presence.
• Exchange of technologies and knowledge – Cooperation facilitates the transfer of innovative solutions, which allows businesses to adapt to market changes and introduce new products or services more quickly.
• Risk sharing – Co-financing projects or sharing operational risks between partners reduces the financial burden on each party.

An example of successful cooperation is that between large technology corporations and startups. Such alliances allow combining the significant financial resources of the former with the innovative potential of the latter, which contributes to the creation of breakthrough products and technologies.

Challenges and risks of cooperation

Despite its many advantages, business cooperation is associated with certain challenges that can complicate its implementation. First, there are conflicts of interest between partners that may arise due to different strategic goals, management approaches, or visions of the joint project. Secondly, there is a risk of unfair behavior, such as unauthorized use of intellectual property or breach of contract. Thirdly, cooperation, especially in the form of mergers or acquisitions, can lead to a loss of autonomy, especially for smaller companies that cooperate with large corporations.

To minimize these risks, it is necessary to:

• Clearly define the terms of cooperation in the agreement, including mechanisms for the distribution of profits, costs and responsibilities.
• Ensure transparency in financial and operational aspects of cooperation.
• Use alternative dispute resolution mechanisms, such as mediation or arbitration, to resolve conflicts quickly and efficiently.

Conclusions

Business cooperation is a powerful tool for achieving economic, strategic and technological goals in today’s environment. It allows businesses to pool resources, reduce costs, gain access to new markets and technologies, and share risks. However, successful cooperation requires careful legal regulation, clear definition of the terms of cooperation and consideration of potential risks.

In Ukraine, special attention should be paid to the compliance of cooperation agreements with antitrust laws, protection of intellectual property and a clear division of rights and obligations between the parties. In the future, given globalization, technological progress, and increased competition, the importance of cooperation will only grow, requiring further improvement of the legal framework, management approaches, and mechanisms for interaction between businesses.

 

Author: Viktoriia Staryk, lawyer at F&P

Ukraine took an important step in formalizing the crypto market back in March 2022 by adopting the Law on Virtual Assets. However, due to the lack of proper amendments to the Tax Code, it has not yet entered into force. There is still a legal vacuum: banks block transactions, businesses return to international exchanges, and platforms do not have clear rules of operation.

New draft law No. 10225-d (July 2025)

On April 24, 2025, MP Danylo Hetmantsev initiated draft law No. 10225-d, which:

• updates the concept of “virtual assets”, classifying them by analogy with the EU/MiCA: asset-backed tokens, e-money tokens, others;

• introduces platform licensing with capital, transparency, and KYC requirements;

• prescribes reporting procedures for transactions with the VA.

How individuals are taxed

According to the updated approach:

• The standard rate is 18 % personal income tax + 5 % military duty (≈ 23 % in total) on income from converting crypto into fiat or for the purchase of goods/services;

• Crypto-to-crypto transactions are tax exempt – just like in Europe and Singapore;

• Preferential rates of 5% or 9% are offered for stablecoin and asset-backed tokens;

• Income from mining, staking, forks, airdrops is determined separately: either at the stage of receipt or only at the time of cashout;

• You can recover damages (carry-forward);

• Transactions within the same minimum subsistence level are not taxed (the relevant exemption threshold).

Taxation for companies

The draft law outlines:

• Obligations of legal entities to separately account for VA transactions;

• Corporate income is taxed at 18% on the difference between revenue and expenses;

• The list of expenses that can be adjusted is defined and formed in accordance with IFRS/national standards;

• Legal entities operating VA (exchanges, platforms, providers) must register (within 60 days), maintain KYC, and submit an annual report on transactions by January 31;

• Penalties for non-compliance range from 20 to 100 minimum wages (~160,000-800,000 ₴).

What’s next?

• Amendments to the Tax Code should be introduced in 2025-2026;

• Transition period: transactions of the previous period can be declared in 2026 on preferential terms – 10% general rate (5 + 5);

• At the same time, Ukraine is implementing the Crypto-Asset Reporting Framework (CARF), an international framework for the automatic exchange of data between CASPs.

Conclusions for businesses

1. Reporting on crypto transactions will become mandatory, and this process requires a thorough accounting logic.

2. Taxation: 18 % + 5 % military tax on sale/conversion income. For some tokens, 5% or 9%.

3. Accounting of expenses for the purchase/exchange of tokens is mandatory to reduce the tax burden.

4. Licensing and reporting: Future crypto platform operators must register and submit annual reports.

5. Transition period until 2029 – higher fines are introduced gradually.

Recommendations:

• VA operators, crypto exchanges, IT companies: prepare an accounting system, document transactions, and consult with lawyers on compliance with the draft law.

• Investors should consider the new regime when planning to buy and sell tokens.

• Legal advisors are encouraged to prepare courses/guides for clients on the new reporting and accounting.

These changes open up opportunities – but only for those who are ready for transparent rules of the game and close accounting.

Author: Olena Andriyko, lawyer at F&P

Incoterms (International Commercial Terms) are internationally recognized standards developed by the International Chamber of Commerce (ICC) that set out clear rules for the allocation of costs, risks and responsibilities between the seller and the buyer in international and domestic trade transactions. The 2020 version of Incoterms, which entered into force on January 1, 2020, is a relevant tool for regulating commercial transactions. This article discusses the key aspects of the practical application of Incoterms 2020, legal nuances that may arise when using them, and recommendations for avoiding problems.

Overview of Incoterms 2020

Incoterms 2020 includes 11 terms divided into two main groups depending on the mode of transport.

Terms for all types of transportation:

EXW (Ex Works) – Ex Works: the seller transfers the goods at his enterprise, the buyer bears all costs and risks from that moment on.

FCA (Free Carrier) – Free Carrier: the seller transfers the goods to the carrier chosen by the buyer.

CPT (Carriage Paid To: the seller pays for transportation to the specified location, but the risks are transferred to the buyer after the goods are handed over to the carrier.

CIP (Carriage and Insurance Paid To) – Carriage and insurance paid to: similar to CPT, but the seller also provides insurance.

DAP (Delivered at Place) – Delivery at the point: the seller bears the costs and risks until the goods arrive at the destination.

DPU (Delivered at Place Unloaded) – Delivery with unloading: the seller is responsible for the delivery and unloading of the goods at the destination.

DDP (Delivered Duty Paid) – Delivery with payment of duty: the seller bears all costs, including customs payments, before the goods are transferred to the buyer.

 

Terms for sea and inland water transportation:

FAS (Free Alongside Ship) – Free Alongside Ship: the seller delivers the goods to the ship’s side.

FOB (Free on Board): the seller bears the costs until the goods are placed on board the vessel.

CFR (Cost and Freight): the seller pays for transportation to the port of destination, but the risks are transferred after loading onto the ship.

CIF (Cost, Insurance and Freight: similar to CFR, but the seller also provides insurance.

Each term clearly defines the moment when risks, costs and responsibilities for transportation, insurance, customs clearance, etc. are transferred. However, misuse or insufficient understanding of these terms can lead to legal and financial problems.

Legal nuances and potential pitfalls

Despite the clarity of the Incoterms rules, there may be difficulties in their practical application due to legal aspects. The main pitfalls include:

• Unclear wording of delivery terms in the contract
• An incorrect or ambiguous definition of the term Incoterms in a contract may lead to disputes over who is responsible for certain costs or risks. For example, if a contract states “FCA” but does not specify a specific place of delivery, the parties may interpret their obligations differently.
• Incorrect choice of term
• Choosing a term that does not match the logistical capabilities, type of goods, or jurisdiction can complicate contract performance. For example, using EXW for international trade can be problematic for a buyer who has no experience in organizing export customs clearance.
• Failure to consider the moment of risk transfer. Incoterms clearly define the moment when the risks pass from the seller to the buyer. However, the parties often fail to take this into account, which can lead to disputes in case of damage or loss of goods. For example, under the FOB term, the risks pass after the goods are loaded on board the vessel, but the buyer may consider the seller to be responsible for the goods until they arrive at the port of destination.

Practical recommendations for avoiding legal problems

In order to effectively use Incoterms 2020 and minimize legal risks, it is recommended to follow the following practices:

• Thorough review of contracts

Before signing the contract, engage a lawyer specializing in international trade to analyze the terms of delivery. Make sure that the term Incoterms is clearly defined, with a specific location (for example, “FCA, seller’s warehouse, Kyiv, Ukraine”). This will help to avoid ambiguities.

• Staff training

Provide training for employees involved in contracting, logistics, or customs clearance. The team should understand the meaning of each Incoterms term and its impact on cost and risk allocation. For example, it is important to know that the term DDP gives the seller maximum responsibility, including customs procedures in the buyer’s country.

• Coordination with partners

Make sure that all parties, including the carrier, buyer, and insurance companies, have the same understanding of the term. For example, under the CIP term, the seller is obliged to provide minimum insurance coverage, but the buyer may require additional insurance, which should be specified in the contract.

• Monitoring changes and updates

Although Incoterms 2020 are up-to-date, the International Chamber of Commerce periodically reviews the rules. Follow the ICC news to be prepared for possible updates. For example, in 2020, the term DPU was replaced by DAT, which necessitated the adaptation of contracts.

Conclusions

Incoterms 2020 is an indispensable tool for structuring international trade transactions, helping to clearly allocate responsibilities, costs and risks between the seller and the buyer. However, their effective use requires a deep understanding of the legal nuances and a careful approach to contracting. Typical mistakes, such as unclear wording of terms or incorrect choice of terms, can be avoided by hiring qualified lawyers, training staff, agreeing on terms with partners, and monitoring changes in the rules.

Compliance with these recommendations will allow businesses to minimize legal risks, optimize logistics processes, and ensure the successful execution of international trade operations.

Author: Maryna Pokotylo, Partner at F&P

In the post-crisis economy and global competition for talent, Ukrainian businesses are looking for new ways to motivate employees. One of these tools is the Employee Stock Ownership Plan (ESOP), a model that allows employees to become co-owners of a company. This practice, which is widespread in the US, Israel, and Estonia, is just beginning to develop in Ukraine. According to the National Center for Employee Ownership (NCEO), more than 14 million employees participate in ESOPs in the United States. In Ukraine, we are taking the first steps towards a new culture of corporate ownership. This article explains the legal, tax and practical aspects of ESOP implementation and offers a clear action plan for companies.

Legal conditions: what is available today?

Ukrainian legislation does not yet have a separate regulation for ESOPs, but the Diia.City legal regime opens up opportunities for granting options for company shares to employees and contractors. This is especially relevant for IT companies, startups, and product teams looking to motivate employees through co-ownership. Companies outside of Diia.City can use direct corporate rights or options through foreign jurisdictions, but this complicates the process due to the need for notarization.

Tax features

Tax accounting is a key challenge for companies implementing ESOPs. Tax is charged at the time of vesting, when the employee receives the benefit – shares or cash compensation. To avoid mistakes, companies should clearly record these transactions and engage qualified accountants.

Practical steps to implement an ESOP

Before launching an ESOP, a company needs to assess whether this model meets its business goals: attracting talent, retaining key employees, or increasing their motivation. It is important to make sure that the corporate culture is conducive to the idea of co-ownership and that the company is financially prepared to transfer shares or buy back options in the future. The next step is to choose a model: direct ownership (transfer of shares or stakes, which requires notarization), options (the right to buy out a stake in the future, popular among startups), or using a foreign jurisdiction through a parent company.

Next, you need to develop the structure of the program. A gradual vesting schedule motivates long-term loyalty, for example, rights vest over four years with the first year as a “cliff”. The buyout terms define what will happen in the event of dismissal, IPO or sale of the company, for example, whether the employee can sell the shares back to the company. The option agreement should clearly set out the terms, conditions, tax consequences and scenarios for termination of employment. To do this, you should hire lawyers with experience in Diia.City or corporate law.

ESOPs should not violate the Ukrainian Labor Code or be perceived as a substitute for salary. Transparent communication with the team is critical: employees need to understand the rights they receive, the risks and rewards associated with options. Seminars or consultations can help explain how the shareholding works and how options are converted into shares or cash. For key employees, you can offer larger shares or flexible terms. It is worth starting with a pilot program, for example, granting options to top managers or key developers to test the model and adapt it to the company’s needs.

Benefits and challenges of ESOPs

ESOPs increase employee loyalty and productivity, as evidenced by NCEO data: companies with ESOPs in the US have 25% higher productivity. Options help to attract talent in the face of competition with international players and allow startups to save on salaries by offering potential profits in the future. At the same time, the lack of clear regulation outside of Diia.City complicates the process, incorrect tax accounting can lead to problems, and employees may not understand the value of options without proper explanation.

The future of ESOPs in Ukraine

The demand for ESOPs is growing, especially in the technology sector. Diya.City has more than 700 registered residents, and their number is growing.

In 2025-2026, more companies are expected to declare stock option programs. This is driven by the revitalization of the tech business, the return of Ukrainian specialists from abroad who are accustomed to similar models, and adaptation to European governance standards, where co-ownership is the norm.

Conclusions

An ESOP is not only a motivation tool, but also a way to align the interests of the company and its team. In the Ukrainian context, where legislation is still evolving, ESOPs offer a unique opportunity to reach a new level of corporate culture. A clear legal framework, transparent communication, and a willingness to invest in people are key components of success. Starting with pilot projects and using the capabilities of Diia.City, Ukrainian companies can lay the foundation for an effective model of co-ownership that will become the standard in the coming years.

Author: Anastasia Holovatyuk, Lawyer at F&P

In today’s business environment, PR, marketing and consulting expenses are an integral part of a company’s development strategy. However, from a tax perspective, these expenses are often subject to scrutiny by regulatory authorities. It is important not only to incur these expenses, but also to properly confirm their reality and connection with the company’s business activities.

1. Legislative framework

According to the Tax Code of Ukraine, marketing, advertising and consulting expenses may be taken into account when determining the object of taxation, provided they are documented and related to the taxpayer’s business activities.

According to the rules of clause 138.1 of Article 138 of the TC of Ukraine, expenses taken into account when calculating the taxable object consist of: operating expenses determined in accordance with clauses 138.4, 138.6-138.9, 138.11 of this Article; other expenses determined in accordance with clauses 138.5, 138.10-138.12 of this Article, clause 140.1 of Article 140 and Article 141 of this Code; except for expenses specified in clauses 138.3 of this Article and Article 139 of this Code.
Paragraph 138.2 of Article 138 of the Tax Code of Ukraine stipulates that expenses taken into account for determining the object of taxation are recognized on the basis of primary documents confirming the taxpayer’s expenses, the obligation to maintain and store which is provided for by the rules of accounting, and other documents established by Section II of this Code.
In accordance with subparagraph 139.1.9 of paragraph 139.1 of Article 139 of the Tax Code of Ukraine, expenses not supported by the relevant settlement, payment and other primary documents, the obligation to maintain and store which is provided for by the rules of accounting and tax calculation, are not included in the expenses.
Sub-clause 14.1.108 of clause 14.1 of Article 14 of the Tax Code of Ukraine defines marketing services as services that ensure the functioning of the taxpayer’s activities in the field of market research, sales promotion of products (works, services), pricing policy, organization and management of the movement of products (works, services) to the consumer and after-sales service to the consumer within the business activities of such taxpayer. Marketing services include, among other things: services for placement of the taxpayer’s products at points of sale, services for studying, researching and analyzing consumer demand, entering the taxpayer’s products (works, services) into sales information bases, services for collecting and disseminating information about products (works, services).
In order to carry out marketing activities, a company must conduct comprehensive market research, analyze the market, segment the market, position the product, develop a marketing mix (marketing mix), etc.
The main condition for deductibility of marketing services is their documentary confirmation and connection of such expenses with the taxpayer’s business activities.

2. Documentary evidence of services

To confirm the reality of the services rendered, it is necessary to have properly executed primary documents containing all the mandatory details provided for in part 2 of Article 9 of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”. Such documents include:
– Service acceptance certificates with a detailed description of the services provided, place and date of their provision, results and connection with business activities.
– Reports on work performed, which may include market analysis, competition assessment, market trends, forecast sales plans, financial plans and other analytical materials.
– Other documents, such as media plans, advertising campaign reports, photo and video reports of events, expense documents, correspondence with contractors, etc.

It is also important to have additional supporting documents and information on the use of such services, such as customer feedback, analysis of the effectiveness of marketing activities, documents confirming the use of marketing materials in business processes and justification of their economic feasibility.

3. Justification of the business purpose

The regulatory authorities pay attention to the existence of a business purpose when incurring expenses for marketing and consulting services. This means that the company must have a justification for the economic feasibility of such expenses, for example, in the form of an order from the head of the company to conduct a marketing event, defining its purpose, goal and expected benefits for the company.

It is also recommended to have a marketing policy – an internal document of the company that describes the approach to marketing activities, accounting for such operations, their purpose, business necessity, etc. Such a document can be a strong argument for the tax authorities in case of questions about the feasibility or reality of marketing activities.

4. Court practice

Court practice confirms the importance of proper documentation of marketing services. The decision of the Administrative Court of Cassation dated 18.10.2023 in case No. 814/1412/17 states that the main condition for deducting marketing services expenses is their documentary evidence and connection of such expenses with the taxpayer’s business activities.

The court also emphasized that the connection of marketing services expenses with business activities may be confirmed by orders of the company on the need to conduct such marketing research, contracts for marketing research indicating the type of research and the purpose of their conduct, as well as acts of acceptance and transfer of services or other documents confirming the actual provision of such services.

5. Recommendations for business

To avoid tax risks, companies are advised to:
– Ensure that all necessary primary documents with mandatory details are available.

– Prepare additional documents confirming the economic feasibility of the expenses.
– Develop and implement the company’s marketing policy.
– Ensure that the costs of marketing and consulting services are linked to the company’s business activities.
– Consult with experts to analyze tax risks and receive recommendations on how to minimize them.

In today’s business environment, it is important not only to incur PR, marketing and consulting expenses, but also to properly confirm their reality and connection with business activities. This will help to avoid tax risks and ensure the stable development of the company.