Tax Residency for Ukrainians: Border-Crossing Data to Be Used as a Criterion

How Tax Residency Is Determined

According to УНІАН — Туризм: The State Tax Service of Ukraine may now rely on information about who crosses the country's state border as one of the signals for deciding whether a Ukrainian citizen qualifies as a tax resident. The move is part of broader efforts to tighten tax compliance and clarify rules for Ukrainians living or working abroad. Nevertheless, frequent foreign travel alone does not automatically trigger audits or create tax claims. In a brief interview with RBC-Ukraine, tax consultant Oleksandra Tomashevska listed the following considerations used in assessing tax residency:

• Whether the person has a home in Ukraine;
• Where their family members reside;
• Which country they work in, earn income in, or run a business in.

According to Tomashevska, someone who claims to live permanently abroad but keeps coming back to Ukraine on a regular basis may find those trips treated as evidence of stronger ties to Ukraine. By contrast, if the family lives together with that person overseas, the center of their vital interests is likely seen as being in another country. Working in Ukraine or running a business there can also point to a closer connection to the country.

What Deregistration Could Mean

It is worth noting that deregistering one's official place of residence can weaken the argument for close Ukrainian ties, but doing so requires notifying banks and can carry serious consequences for the individual. When a person resides and works abroad permanently and their family is with them, that other country is normally considered the place of tax residency. In such cases, that person's information should not be forwarded automatically to Ukraine through international exchange mechanisms.

The State Tax Service and the State Border Guard Service have launched automated data sharing on border crossings. This system does not alter the rules for crossing the frontier; instead, it is designed to improve detection of potential tax violations. With faster access to border-crossing records, the tax authority can strengthen oversight of compliance with Ukrainian tax law.

Tomashevska advises relying on formal legislation rather than isolated public explanations or online posts, as this can prevent confusion in tax residency matters.

The automated exchange of border-crossing data between the tax service and the border guard agency is a significant step toward more effective enforcement of Ukraine's tax rules. It may make residency determinations more transparent and reduce the risk of tax violations by individuals. At the same time, Ukrainians need to understand their rights and obligations under the new system, avoid mistakes, and act in line with legal requirements.

As the State Tax Service begins to utilize border-crossing data in its assessments, it's crucial to understand the implications of this change. The integration of these records is part of a broader strategy to enhance tax compliance. For more information on how this data sharing between the tax and border services works, see our article on automatic data exchange on border crossings.