Exchange of financial account information under the CRS agreement: what you need to know

Exchange algorithm

The exchange algorithm is as follows: financial institutions of a certain country collect information on accounts of Ukrainian residents and transmit it to the competent authorities of their country. The competent authorities then transfer the information to the tax authorities of Ukraine. In the same way, financial institutions and tax authorities of Ukraine collect and transmit information on accounts of residents of other countries.

Financial institutions (banks, financial companies, and other institutions) conduct audits of individuals’ accounts to identify which accounts need to be reported (transferred to another country). They conduct paper-based data searches, electronic data searches, and send inquiries to account managers to obtain factual information.

The verification procedure depends on the type of account. Low-value accounts (with an aggregate balance or value of up to USD 1,000,000 as of December 31) are reviewed in a simplified format. High-value accounts (with an aggregate balance or value of more than USD 1,000,000 as of December 31) are subject to in-depth review procedures.

Criteria

Financial institutions determine whether an account is accountable based on the following criteria and documents

• the current residential or mailing address of the account holder;
• telephone numbers;
• accounts to which funds are most often transferred and the country where they are maintained;
• a document of the account holder’s self-assessment of the jurisdiction of residence;
• evidence confirming that the account holder is not subject to reporting;
• evidence collected in relation to the account;
• the actual signed agreement or documentation on opening the account;
• documentation in accordance with AML/KYC procedures.

Information

What account information is exchanged between the competent authorities of the countries:

• name, address, jurisdiction of residence, TIN, date, place of birth of the account holder; it is not required to transfer information on TIN or date of birth if the records (registers) of the financial institution do not contain such information or its collection is not provided for by the national legislation of the country;
• account number;
• name and number of the financial institution where the account is opened;
• account balance or value as of the end of the calendar year or as of the date of closure;
• other information depending on the type of account (e.g., total gross interest, proceeds from the sale or redemption of financial assets, etc.)

Additionally

What are the exemptions for the period of martial law for Ukrainian citizens – information on financial accounts of Ukrainian citizens is exchanged. However, if the balance or value of all financial accounts owned by one person – a citizen of Ukraine – does not exceed the equivalent of USD 250,000 as of December 31, information on such financial accounts is not used to determine tax liabilities.

When does the exchange take place – annually by September 30, information on financial accounts as of the previous calendar year is exchanged.

What happens if the financial account holder provides the financial institution with documents containing false information – a fine of UAH 800,000 (in 2025, the fine will be reduced to UAH 400,000).

What may be the consequences of detecting undeclared income of Ukrainian residents:

• accrual of personal income tax at the rate of 18% and military duty at the rate of 5%;
• financial liability in the form of fines in the amount of 10% to 50% of the amount of the determined tax liabilities, there may also be fines for late submission of reports and other penalties;
• administrative liability (in the form of a warning or a fine, the amount of which depends on the type of violation);
• criminal liability for tax evasion (in the form of a fine, the amount of which depends on the amount of unpaid taxes).

Conclusions

The exchange of information on financial accounts between countries really works. The Ukrainian tax authorities send inquiries to the owners of accounts opened in foreign financial institutions. The requests are for explanations and documents regarding the funds on the accounts.

The issue of information exchange is particularly relevant for Ukrainian citizens who have temporarily moved abroad due to the war or who permanently reside in another country. Accordingly, they have opened accounts abroad.

First of all, it is important to determine the tax residency status and to correctly indicate your status when opening/using accounts.

We recommend checking the information on open accounts and, if necessary, updating the data, the self-assessment questionnaire for determining tax residency in accordance with the current current data (address of residence and stay, telephone numbers, etc.). When opening new accounts, pay attention to the status of the financial institution and its requirements for information exchange (whether it has the status of an accountable financial institution that collects information for further exchange, what documents/data must be provided to confirm the residency status, etc.)