Author: Uliana Luchkevych, lawyer at F&P
Investment profit is a key indicator of the efficiency of financial investments, especially when it comes to the sale of corporate rights. In a dynamic market, corporate rights become an important asset that can bring significant income to investors and business owners.
This article examines the main aspects of determining investment income from the sale of corporate rights, the specifics of its taxation, as well as the factors influencing its amount. Special attention is given to the legal and economic aspects of such transactions, which will help investors make informed decisions and minimize risks.
Corporate rights are a set of rights of a participant (founder) of a legal entity, which include the right to participate in management, receive a share of the profit (dividends), and distribute assets in the event of the company’s liquidation. Ownership of corporate rights is a means of controlling the enterprise and can serve as both a strategic and a financial asset.
The sale of corporate rights can be carried out through the transfer of a share in the charter capital of a limited liability company (LLC) or through the alienation of shares in the case of joint-stock companies (JSC).
One of the issues that arises when selling corporate rights is the question of taxing the amount received from the conducted sale transaction, as the need for taxation does not always arise.
The Tax Code of Ukraine stipulates that investment income is calculated as the positive difference between the income received by the taxpayer from the sale of a specific investment asset, taking into account the exchange rate difference (if any), and its cost, which is determined from the amount of documented expenses for acquiring such an asset.
That is, investment income arises only if the sale price of corporate rights (taking into account documented expenses) is higher than the price at which these corporate rights were previously acquired through their purchase or the contribution of the corresponding amount to the company’s charter capital.
In the event of a positive difference between the sale price and the acquisition price, an individual is obligated to pay personal income tax and military levy. At the same time, if the positive difference is less than the amount of the tax social benefit (note: in 2025 – 1514 UAH), then such income is exempt from taxation.
If a person sells corporate rights in a non-resident legal entity in foreign currency, the value of the corporate rights is determined in hryvnias at the exchange rate of the National Bank of Ukraine that is in effect on the date of receiving income from the sale of such an investment asset.
In this case, if a person’s expenses for acquiring corporate rights or forming the charter capital of an enterprise are equal to or greater than the received income, the investment profit does not arise and, accordingly, the received amount is not taxed.
Investment profit plays an important role in the process of selling corporate rights, as it determines the financial result of such an operation and its tax implications.
To minimize tax risks and optimize the profitability of corporate rights transactions, investors need to carefully analyze financial indicators, maintain documented records of expenses and income, and consider current legislative changes. The specialists at FEDORYSHYN&PARTNERS will help assess the potential risks of selling corporate rights and offer the most optimal options for such sales, taking into account the requirements of the legislation.
