The statute of limitations for the imposition of penalties for violations in the foreign economic activity (FEA) sector is determined in accordance with Article 102 of the Tax Code of Ukraine and is 1095 days

The Supreme Court of Ukraine, as part of the panel of judges of the Cassation Administrative Court, in its ruling dated February 20, 2018, in case No. 808/2535/17, confirmed that, according to part 3 of Article 250 of the Commercial Code of Ukraine, the 6-month limitation period for penalties in the foreign economic activity (FEA) sector cannot be applied, since the penalty for violating the foreign currency payment terms imposed by the State Fiscal Service (SFS) is not considered an administrative-economic sanction within the meaning of Chapter 26 of the Commercial Code of Ukraine.

Thus, in its decision, the Supreme Court noted: “The panel of judges concluded that this dispute is regulated by the norms of currency and tax legislation. Essentially, within the framework of the disputed legal relationship, there is a currency offense, which is subject to regulation in terms of controlling compliance with the established statutory terms for foreign currency payments by the tax authority in accordance with subparagraph 19-1.1.4 of paragraph 19-1.1 of Article 19 of the Tax Code of Ukraine. The imposition of fines (financial sanctions) and penalties for violations in the field of foreign economic activity is carried out by this body in accordance with subparagraph 54.3.3 of paragraph 54.3 of Article 54 of this Code.

“Foreign currency settlements do not constitute a violation of economic activity, and therefore, the penalty imposed by the tax authority through the disputed tax notice-decision is not considered an administrative-economic sanction within the meaning of Article 238 of the Commercial Code of Ukraine, and consequently, the limitation periods for applying these sanctions, as set out in Article 250 of this Code, do not apply to the disputed legal relationship.”

Thus, the Supreme Court has definitively resolved this issue, and the statute of limitations for the imposition of penalties for violations in the field of foreign economic activity is determined in accordance with Article 102 of the Tax Code of Ukraine, and is 1095 days.

A lawful way to avoid penalties for violations of foreign economic activity contract deadlines is by extending such deadlines through obtaining the appropriate conclusions from the Ministry of Economic Development and Trade (MERT) of Ukraine.

Please note that this publication is not a legal consultation and is provided for informational purposes. If you have a specific issue related to this publication, it is recommended to seek a full consultation from our specialists.

The copyright of this material belongs to the law firm WinnerLex.

Reprinting the materials of this article without clearly citing the author’s name, the company the author works for, and the source of the material constitutes a violation of copyright and entails liability as stipulated by current legislation.