Minimizing company liquidation costs in Ukraine

Case study

Challenge

One of Europe’s leaders of sustainable and energy-efficient building materials had to part ways with one of the top-managers of its distribution company in Ukraine on short notice.
Furthermore, the client planned the voluntary liquidation of its distribution company within the following 2 years, which led to a tax audit by the Ukrainian tax authorities. As a result of the first audit, the claims brought by Ukrainian tax authorities totalled approximately EUR 135,000.

Solution

At the initial stage, SCHNEIDER GROUP provided the client with interim management service for the distribution company and managed to immediately take control of the business processes and established all the procedures necessary for the compliant operation of the company.

For the liquidation process, we took over all the necessary preparatory activities such as termination of existing contracts, redundancy of employees, disposal of assets, etc. During interim management, we identified significant drawbacks in the accounting of the company which posed a risk of potential penalties from the upcoming liquidation tax audit. Furthermore, severe noncompliance with Ukrainian transfer pricing regulations was found. Considering this, we proposed our accounting solution to the client with the aim to correct accounting deficiencies and prepare necessary reports and documentation in the area of transfer pricing.

SCHNEIDER GROUP supported the client during the entire liquidation tax audit. We believed that the initial claims by the authorities were arbitrary and weakly grounded, although the accounting history of the company for the audited period of 3 years was admittedly not ideal, and therefore the tax officials did not allow the audit to pass without penalties. The interdisciplinary solution we provided to the client was based on challenging the majority of tax claims with subsequent restoring of accounting in order to prove that the accusations of the tax authorities were mostly unreasonable.

As a result, the legal team of SCHNEIDER GROUP challenged the audit conclusion and requested an additional and more precise audit in order to prove the client’s compliance, while the accounting team worked heavily on correcting the accounting mistakes and searched for proper primary documentation to back the client’s position.

Result

At the end of the additional liquidation audit, the total claims from the Ukrainian tax authorities was reduced by about 90%, which was highly appreciated by the client and considered a significant success.
The liquidation of the client’s distribution company was successfully completed.

SCHNEIDER GROUP has continued cooperating with this client, gradually broadening the scope of support in Ukraine. We are proud to have become an efficient solution provider in Ukraine and highly appreciate the trust our clients have in our company.

Get in touch with us
Yuri Donets
Partner, Kyiv
+380 /44/ 490 55 28
Artem Barinov
Associate Director, Legal & Tax
+380 / 44 / 490 55 28
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