Business restructuring is a change to a company's legal, financial and organisational structure while the business keeps operating. Key Solutions handles the accounting and tax side in Ukraine: we model the tax consequences of each option, run the inventory count, prepare the transfer deed or distribution balance sheet and support you through the tax audit.
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In short
- When you need it: business lines are mixed in one entity, an investor or buyer is coming, or partners are splitting the company.
- What you get: tax consequences of each option, an inventory count, a transfer deed or distribution balance sheet, a notification plan and tax audit support.
- Timing: in our experience, the accounting part takes 4–8 weeks; the whole procedure, with creditor periods and the tax audit, usually takes three months or more.
- Fee: agreed individually, based on the form of reorganisation, number of entities, state of the books and tax history.
- How to start: describe the current structure, your goal and known debts. Legal work is handled by our group partner legal.ua.
What restructuring means under Ukrainian law
Restructuring changes the set of legal entities, the allocation of assets, the ownership structure or the debt load. Corporate restructuring is formalised through one of five forms of reorganisation under the Law on Limited and Additional Liability Companies (Law No. 2275-VIII).
| Form | What happens | Company and document |
|---|---|---|
| Merger (Art. 49) | A new successor receives all property, rights and obligations of several companies | All merging companies cease; transfer deed |
| Accession (Art. 50) | A company transfers everything to an existing company | The acceding company ceases; transfer deed |
| Division (Art. 51) | Everything passes to two or more new companies | The company ceases; distribution balance sheet |
| Spin-off (Art. 47) | New companies receive part of the property, rights and obligations | The company continues; distribution balance sheet |
| Transformation (Art. 52) | The legal form changes, everything passes to the successor | The company ceases; transfer deed |
What our support includes
Resolutions, registration and corporate documents are prepared by the lawyers of our group partner legal.ua.
- diagnostics: tax history, tax liens, secured and unsecured debts, disputes and the state of the books;
- comparison of reorganisation forms by tax effect: debt, VAT registration, negative balances, simplified tax;
- a model of the future structure, including a check for controlled transactions under transfer pricing rules;
- a full inventory count, the transfer deed or distribution balance sheet and period close;
- notices to the tax authority and support through the unscheduled tax audit;
- set-up of the successor's accounting and VAT registration.
How we work
- Diagnostics. We review the books, tax history, liens, debts and disputes.
- Choice of form. We compare the five forms by tax and accounting effect, including VAT registration.
- Notifications. The tax authority is notified within three working days of the decision (subpara 16.1.10 of the Tax Code); creditors under Art. 55 of Law No. 2275-VIII.
- Accounting block. A full inventory count (para 7, section I of Order No. 879), then the transfer deed or distribution balance sheet.
- Completion. Unscheduled tax audit, settlement of creditor claims, registration and VAT registration of the successor.
Tax consequences of a reorganisation
| Tax item | Rule | Tax Code |
|---|---|---|
| Tax debt | Passes to successors; in a division, pro rata to book value of assets; in a spin-off, only by tax authority decision | Art. 98 |
| VAT on the transfer | Reorganisation is outside the scope of VAT | subpara 196.1.7 |
| Negative VAT balance | Passes to the successor once confirmed by a documentary audit | para 198.7 |
| Corporate income tax loss | May pass to the successor within equity and related-party limits | subpara 140.4.5 |
| Tax audit | Starting a reorganisation (except transformation) triggers an unscheduled audit | subpara 78.1.7 |
Timing and fee
In our experience, the accounting and tax part takes 4–8 weeks, and the whole procedure usually takes three months or more because of creditor periods and the tax audit. The fee is agreed individually after diagnostics and fixed in the contract.
What we need from you
- the goal, the target structure and the ownership documents;
- read access to the accounting system and recent statements and returns;
- a list of creditors, security agreements and disputes.
Deliverables
- a tax impact memo for each option with a recommended form;
- inventory count records and the transfer deed or distribution balance sheet;
- the successor's accounting policy and opening balances under the transfer deed or distribution balance sheet.
Legal basis
Legal basis for the work
- Arts. 47–55 of Law No. 2275-VIII: forms of reorganisation, succession, transfer deed and distribution balance sheet, creditor protection;
- Art. 98, subparas 16.1.10 and 78.1.7 of the Tax Code: tax debt in a reorganisation, notice and unscheduled audit;
- Subpara 196.1.7, paras 183.17 and 198.7 of the Tax Code: VAT in a reorganisation;
- Part 1 of Art. 10 of Law No. 996-XIV: inventory counts.
Risks and why to hand the accounting side to a contracted team
A transfer deed or distribution balance sheet drawn up without a full count widens the subsidiary and joint liability of successors (Art. 55 of Law No. 2275-VIII). We work under a contract with agreed scope, timing and confidentiality. Read more in Restructuring a business: what to be ready for.
Why Key Solutions
- Company
- ТОВ «АУДИТОРСЬКА ФІРМА «КЕЙ СОЛЮШНЗ», a Ukrainian limited liability company, EDRPOU code 39610085. The company's details are public in the Unified State Register (ЄДР).
- Contract
- We work under a contract: scope, timing, liability and confidentiality are agreed before work starts.
- Group
- Key Solutions is part of Innova Consulting Group: legal matters are handled by legal.ua, crypto-asset taxation by crystal.tax.
- Office
- Our office is at 77 Velyka Vasylkivska St., Kyiv. We serve clients across Ukraine remotely. The specialists who run engagements are listed on the Our employees page.
Frequently asked questions
Do tax debts pass to the successor in a reorganisation?
Yes. In a merger, accession, division or transformation, tax liabilities and tax debt pass to the successors under para 98.2 of the Tax Code; in a division they are split in proportion to the book value of assets under the distribution balance sheet. In a spin-off para 98.3 provides no split, unless the tax authority decides otherwise for assets under a tax lien.
Is VAT charged on a reorganisation?
Reorganisation transactions (merger, accession, division, spin-off and transformation) are outside the scope of VAT under subpara 196.1.7 of the Tax Code. An entity formed in a reorganisation, other than by transformation, registers for VAT as a new entity (para 183.17), and a negative VAT balance passes to the successor after a documentary tax audit confirms it (para 198.7).
How long does a reorganisation take?
The company must notify known creditors within 30 days of the decision, and creditors then have 30 days to file claims; a spin-off or termination cannot be completed until filed claims are satisfied (Art. 55 of Law No. 2275-VIII). The tax authority also runs an unscheduled documentary audit (subpara 78.1.7 of the Tax Code). In our experience, the whole process usually takes three months or more.
How is restructuring different from reorganisation?
Reorganisation is a legal procedure in one of five forms under Law No. 2275-VIII: merger, accession, division, spin-off or transformation. Restructuring is broader: it may include a reorganisation or only change the debt, assets and intra-group settlements while the set of entities stays the same.
Who handles the legal side of a reorganisation?
Resolutions of participants, the termination agreement and state registration are handled by the lawyers of legal.ua, our partner within Innova Consulting Group. Key Solutions handles accounting and tax, so the documents, statements and filings stay consistent with each other.
How much does restructuring support cost?
Our accounting and tax support fee is agreed individually. It depends on the form of reorganisation, the number of entities, the state of the books, tax history, liens and disputes, and tax audit support. Legal support from legal.ua is agreed separately.
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Let's discuss your restructuring
Tell us about the current structure, what you want to change and whether there is tax debt or a dispute. We will reply with the form, scope, timing and our accounting support fee.
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