Founder in Germany, Ukrainian Company Still Operating: What Needs to Be Reassessed?

The key question is not simply whether the Ukrainian company “becomes German” after the founder relocates. The founder and the company are separate taxpayers and must first be tested separately.

The review then reconnects personal residence, Ukrainian company status, actual management, German PE and CFC exposure, owner and intercompany payments, Ukrainian FX execution, banking and evidence.

The founder and the company should first be tested separately — and then connected again through management, treaty rules, PE, CFC, payments, banking and evidence.

Broader context: Founder Moves, Business Stays

Start with the founder — but do not use founder residence to answer the company question

Under German domestic law, an individual may become subject to unlimited German income taxation where the person has a Wohnsitz or gewöhnlichen Aufenthalt in Germany. The analysis follows §1 EStG together with §§8–9 AO; it is therefore not safely reduced to a single “183-day rule”.

If Ukraine also treats the individual as resident under its domestic rules, the applicable Germany–Ukraine treaty must then be considered separately. That individual-residence analysis does not decide where the Ukrainian company is resident.

The Ukrainian company does not disappear when its shareholder moves

A company established and operating under Ukrainian law does not lose its Ukrainian legal and tax position merely because its shareholder relocates. The Ukrainian Tax Code continues to place Ukrainian-law legal entities within the domestic residence framework. Tax Code of Ukraine

The company may therefore continue to have Ukrainian corporate, CIT, payroll, VAT, withholding, accounting, transfer-pricing and currency-control obligations.

Before German corporate-tax consequences are applied, the relevant foreign legal form should also be classified for German tax purposes.

Has the founder moved — or has actual company management moved as well?

German corporate tax law does not look only at incorporation. For relevant entities, §1 KStG can establish unlimited German corporation-tax liability where either Sitz or Geschäftsleitung is in Germany. §10 AO defines Geschäftsleitung through the Mittelpunkt der geschäftlichen Oberleitung.

The factual review asks where ongoing management and material day-to-day business direction are actually exercised. Relevant facts may include who controls bank accounts, approves recurring payments, directs senior staff, negotiates key commercial arrangements and resolves ordinary management issues.

Detailed analysis: Foreign Company Managed from Germany

Domestic residence comes first; treaty residence comes next

Ukraine may continue treating the entity as resident under Ukrainian domestic law while Germany may assert German corporate residence through Geschäftsleitung. That can create a dual-residence case.

The currently applicable Germany–Ukraine treaty remains the agreement signed in 1995 and in force since 3 October 1996. BMF treaty record

Under Article 4(3) of the current treaty, where a company is resident in both states it is treated for treaty purposes as resident in the state where its place of effective management is situated.

Treaty residence does not replace the separate domestic-law tests used for other German tax provisions. In particular, the §7 AStG foreign-company gate must still be tested under its own statutory wording.

Treaty transition watch

Germany and Ukraine signed a replacement treaty on 19 May 2026. As of 2 October 2026, the BMF still records that it requires ratification before entry into force. BMF Ukraine treaty page

The signed treaty retains place of effective management as the primary corporate tie-breaker and adds a competent-authority fallback for unresolved cases. That rule is not yet operative.

If the company remains non-resident in Germany, the German analysis may still continue

Corporate residence and permanent establishment are different questions. A founder working from a German home does not automatically create a PE. The relevant questions include whether and how the location is used for the company’s business, what functions are actually carried out there, and how those facts fit the applicable domestic and treaty tests.

§12 AO contains the German domestic Betriebsstätte framework.

Detailed analysis: Home Office After Founder Relocation

CFC is a separate test — and it should not be analysed first

§7 AStG defines the relevant foreign-company gate through, among other conditions, the absence of both Geschäftsleitung and Sitz in Germany. The management question therefore comes before the classic CFC sequence.

A disciplined review runs through German taxpayer nexus → foreign-company gate → control → income classification → low-tax test → available exceptions → attribution and reporting.

§8(5) AStG currently uses a low-tax threshold of less than 15% under the statutory methodology. A Ukrainian headline corporate tax rate should not be used as a shortcut.

For a company whose seat and relevant management remain in Ukraine, the ordinary §8(2) economic-activity exception is not available through §8(3), because Ukraine is neither an EU Member State nor an EEA treaty state. If management were already in Germany, the earlier §7 foreign-company gate would first need to be revisited.

Detailed analysis: German CFC Rules After Founder Relocation

“Money from the company to the owner” is not one legal category

The payment may be a dividend, salary, director remuneration, interest, loan repayment, reimbursement or payment under a services arrangement. Each route may have different Ukrainian, German, treaty, payroll, social-security, withholding and banking consequences.

Re-labelling the payment does not change its economic character.

If a German GmbH or another German business activity is added, transfer-pricing and intercompany-flow analysis becomes more important. The agreement should follow the operating model; it should not be written first and used later to create a fictional operating model around it.

A tax right to distribute is not the same as an unrestricted ability to transfer

Ukraine continues to operate wartime FX restrictions under NBU Resolution No. 18 and a staged liberalisation framework. Dividend transfers abroad can be permitted subject to the rules, eligibility criteria and limits applicable at the transaction date. NBU FX liberalisation

The shareholder’s Ukrainian currency-law status must also be tested separately. German tax residence does not, by itself, determine resident/non-resident status for Ukrainian FX purposes.

A German or EU receiving bank may also need a coherent Source of Funds / Source of Wealth file linking ownership, profits, distribution, taxation and the transfer route.

Documentation should describe the operating reality

Depending on the structure, the evidence file may need to show director authority, shareholder reserved matters, powers of attorney, bank-access rights, payment approvals, management meetings, contract authorisations, delegation to Ukrainian management and reporting lines.

The objective is not paperwork for its own sake. It is to ensure that legal documents, operating behaviour and tax positions are consistent with each other.

Before relocation, the work is primarily design. After relocation, it is often reconstruction: when residence began, what functions were performed from Germany, which contracts or payments occurred, and which filings may already have arisen.

Germany–Ukraine founder relocation — the essentials

Founder in Germany while the Ukrainian business continues?

Map the founder’s residence, actual company management, Ukrainian entity position, German PE and CFC exposure, payment routes, currency restrictions and supporting evidence before changing the corporate structure.