A company operating in the financial leasing sector faced the consequences of a scheduled tax audit: additional assessments of more than UAH 300,000 in corporate income tax, the imposition of over UAH 90,000 in penalties, and a reduction of negative VAT balance by more than UAH 300,000. For the business, this meant not only a financial burden but also the risk of a precedent—where investments in development and compliance could be called into question.
The basis for these decisions was the consulting services obtained by the company. The tax authority claimed that the relevant transactions had signs of being non-genuine and lacked a valid business purpose. According to the tax officials, given the presence of a director and in-house staff, the company could have ensured compliance with financial services legislation on its own, making the engagement of external consultants unjustified.
The company disagreed with these conclusions. It explained that after obtaining the status of a financial company, there was a need to promptly and correctly align its operations with the requirements of the National Bank of Ukraine (NBU). It was precisely for this purpose that the business engaged specialized external expertise. The complainant insisted that the services were actually provided, their content and results were properly documented, and their economic rationale was obvious—compliance with regulatory requirements directly affects the company’s ability to operate.
In parallel with the administrative appeal to the State Tax Service of Ukraine (STS), the company also approached the Business Ombudsman Council. After reviewing the materials, the Council supported the applicant’s position. In its arguments, the Council emphasized that these were not formal or nominal expenses, but consultations with practical substance aimed at ensuring compliance with NBU requirements. Therefore, such costs had a reasonable economic cause and a legitimate business purpose.
During the consideration of the appeal by the STS of Ukraine, an inspector of the Council took part in joint discussions with representatives of the tax authority and the company, which helped focus attention on the essence of the dispute: the reality of the services received, their connection to the company’s business activities, and the correctness of assessing the business purpose.
As a result, the STS of Ukraine cancelled the tax assessment notices and fully upheld the company’s complaint. The business avoided payment of the additionally assessed corporate income tax and penalties and preserved its negative VAT balance.
