Electronic declarations & full audit support

Under Article 1 of the Law of Ukraine “On Prevention of Corruption”:

Two concepts are very often confused — “close persons” and “family members.”

To check, read the statutory wording carefully and apply the three-part test:

• living together;
• sharing a common household;
• having mutual rights and obligations.

Please note: if there is a registered marriage, you enter the spouse in the declaration regardless of whether you live together. Children of the declaration subject under the age of majority are entered regardless of whether they live with the subject.

Family members other than the spouse or children are persons who lived together with the declaration subject as of the last day of the reporting period, or for a total of at least 183 days during the year preceding the year the declaration is filed.

Parents, sisters, brothers, common-law spouses and same-sex partners are listed in the declaration only if all elements of the three-part test coincide.

Under the Law of Ukraine “On Prevention of Corruption”, the declaration subject must enter in the declaration all real estate regardless of its value, if these objects belong to them by right of ownership, are leased, or are held under another right of use as of the last day of the reporting period, or for at least half of the days of the reporting period.

Note that the date of acquiring ownership is the one stated in the documents on the basis of which ownership was acquired.

Special attention should be paid to the fact that information about an object held in the possession or use of the declaration subject or their family members is stated in the declaration if the object was in possession or use as of the last day of the reporting period, or for at least half of the days of the reporting period. Note that ownership is not the same as possession — these are two separate concepts.

Ownership is declared as of 31 December of the reporting year.

Also note that information about real estate that is the registered place of residence of the declaration subject or their family members must be stated in Section 3 “Real Estate” of the declaration, even if the person actually lives elsewhere.

In the NACP's view, when stating the value of real estate acquired under a sale-and-purchase (exchange) agreement after 1 January 2018, it is advisable to state the appraised value calculated by the body authorized to perform such valuation in accordance with the law and registered in the unified database of valuation reports, details of which are given in the title documents.

For objects acquired before 1 January 2018, the value is stated according to the title documents — at the price indicated in the sale-and-purchase (exchange) agreement, absent details of an expert appraisal in the agreement. The NACP also stresses: if the title document states both the price and the value by monetary valuation, for declaration purposes it is advisable to state the value by monetary valuation.

Under paragraph 2 of Article 182:

So in the section “Valuable movable property (other than vehicles)” the declaration subject lists precious jewellery, antiques, furniture, works of art, paintings, sculptures, fine porcelain, rare antiquarian books, expensive branded clothing, furs, valuable weapons (both firearms and bladed weapons), and accessories — bags of well-known brands, cigarette cases and the like.

There is a single yardstick: the value of a single item must exceed 100 subsistence minimums.

In my experience, a typical mistake is when the declaration subject writes “a collection of paintings,” “a set of sculptures,” “a porcelain collection.” And that is where the problems begin.

Please note: valuable movable property is declared item by item!

If valuable movable property is at the same time a gift, it is declared in two sections at once — “Valuable movable property (other than vehicles)” (where the threshold is exceeded) and “Income, including gifts.” The item is stated if its value exceeds the threshold set by law — 100 subsistence minimums for able-bodied persons as of 1 January of the reporting year.

The value of a valuable movable item owned by the declaration subject or a family member is stated in hryvnia as of the date of acquiring ownership, possession or use of the item.

The manner of acquisition does not matter: if the value of an object (for example, a piece of jewellery) exceeds 100 subsistence minimums for able-bodied persons as of 1 January of the reporting year, it must be shown in the declaration. The value of each valuable movable item is stated separately, except where items were acquired as a set (a dinner service, a furniture set, a set of jewellery, etc.) at the same time.

Under the requirements of the Law “On Prevention of Corruption”, all real estate must be stated in the annual declaration. Under clause 2 of part 1 of Article 46, the section “Unfinished construction” must list objects of unfinished construction, objects not yet commissioned, and objects the ownership of which was not registered in the manner established by law during the reporting year.

Gifts are a very interesting story altogether. Information about a gift is stated in the electronic declaration only if its value exceeds five subsistence minimums for able-bodied persons as of 1 January of the reporting year. But let us recall the specifics of gifts and the restrictions on receiving them.

Persons listed in clause 1 of part 1 of Article 3 of the Law “On Prevention of Corruption” may accept gifts that meet generally accepted notions of hospitality (except as provided in part 1 of that Article) if the value of such gifts does not exceed one subsistence minimum for able-bodied persons as of the day the gift is accepted, on a one-off basis, and the aggregate value of such gifts from one person (group of persons) during the year does not exceed two subsistence minimums for an able-bodied person as of 1 January of the year in which the gifts are accepted.

The value restriction does not apply to gifts that:

1. are given by close persons (close persons are those who live together, share a common household and have mutual rights and obligations with the subject, including persons who live together but are not married; and also — regardless of these conditions — spouse, father, mother, stepfather, stepmother, son, daughter, stepson, stepdaughter, brother, sister, grandfather, grandmother, great-grandfather, great-grandmother, grandson, granddaughter, great-grandson, great-granddaughter, son-in-law, daughter-in-law, father-in-law, mother-in-law, adopter or adoptee, guardian or custodian, and a person under the guardianship or care of the subject);
2. are received as generally available discounts on goods and services, generally available winnings, prizes, awards and bonuses.

A valuable item that is a gift must be shown not only in the “Valuable movable property” section but also in the “Gifts” section.

If valuable movable property (other than money) is at the same time a gift, then where the statutory threshold of 100 subsistence minimums is exceeded, it is declared both in “Valuable movable property (other than vehicles)” and in “Income, including gifts.” The same approach applies to any other property that is at the same time a gift.

For example, gifts in the form of securities or a vehicle are additionally declared in the “Securities” and “Vehicles” sections respectively. In addition, valuable property acquired during the reporting period as a gift should also be reflected in the “Expenditures and transactions” section as an item of “Another transaction” that did not entail an expenditure (provided its value exceeds the threshold of 50 subsistence minimums set for that section).

Let's start from the end — who does not need to fill in this section. Note that the “Expenditures and transactions” section lists only the expenditures and transactions of the declaration subject; those of family members are not stated.

Under clause 10 of part 1 of Article 46 of the Law, the declaration states expenditures and all transactions made during the reporting period on the basis of which the declaration subject acquires or terminates ownership, possession or use of the objects listed in clauses 2–9 of part 1 of that Article. A declaration threshold is set for expenditures: if a single expenditure exceeds 50 subsistence minimums as of 1 January of the reporting year, it must be reflected in the declaration. Expenditures made during the reporting period are not summed — the declaration states each separate expenditure that exceeds that limit.

I draw special attention to the fact that it does not matter whether the object of the transaction is owned or held on another right by the declaration subject as of the last day of the reporting period. Information is stated about transactions and expenditures carried out during the reporting period, even if they concerned the same object.

And don't forget: in the event of a significant change in the subject's financial situation — receiving income, acquiring property or making an expenditure exceeding 50 subsistence minimums for able-bodied persons as of 1 January of the relevant year — the subject is obliged to notify the National Agency within ten days.

Only officials holding a responsible or especially responsible position, as well as declaration subjects in positions associated with a high level of corruption risks, are obliged to submit notifications of changes in their financial situation.

Vehicles are not only cars: they also include buses, self-propelled machines built on car chassis, motorcycles of all types, makes and models, trailers, semi-trailers, motor sidecars, other vehicles equated to them and mopeds, agricultural machinery, and water and air craft.

Unlike other valuable movable property, information about vehicles is stated regardless of their value.

The declaration states the value of a vehicle as of the date it was acquired into ownership, possession or use. As a reminder, under Article 334 of the Civil Code of Ukraine, “the acquirer's ownership of property under a contract arises from the moment the property is transferred, unless otherwise established by the contract or law.”

The costs of customs clearance or registration of a vehicle are not included in its value. At the same time, if such an expenditure exceeds the declaration threshold (50 subsistence minimums) and was made by the declaration subject during the reporting period, it must be reflected in the “Expenditures and transactions” section.

If the declaration subject uses a vehicle under a power of attorney and does not know full information about the owner, how should the owner's details be reflected in the declaration? The power of attorney contains the details of the property's holder. As a reminder, information about vehicle owners can be obtained from the open Unified State Register of the Ministry of Internal Affairs regarding registered vehicles and their owners.

If a vehicle is owned by the declaration subject, it is stated as that subject's object; I would also recommend stating it as an object used by family members if they use it at least from time to time.

Under clause 12 of part 1 of Article 46 of the Law of Ukraine “On Prevention of Corruption”, the declaration states information about the declaration subject's membership in civic associations, charitable organizations, self-regulatory or self-governing professional associations, as well as being part of the governing, audit or supervisory bodies of such associations (organizations).

Associations (organizations) membership in which (membership in whose bodies) must be reflected in the declaration include:

1. associations covered by the Law of Ukraine “On Civic Associations” — civic organizations and civic unions with the status of a legal entity;
2. civic organizations of employers and their associations (the Law of Ukraine “On Employers' Organizations, Their Associations, Rights and Guarantees of Their Activity”);
3. charitable organizations (the Law of Ukraine “On Charitable Activity and Charitable Organizations”);
4. self-regulatory associations — non-profit associations of individuals and legal entities engaged in professional activity in a particular market or field (in particular, associations of professional participants in the securities and stock markets, administrators of non-state pension funds, credit unions, organizations in architecture and land management, participants in Ukraine's electricity market, appraisers, auditors, insolvency practitioners, etc.);
5. self-governing professional associations — associations of individuals engaged in professional activity (in particular, self-governing associations of lawyers — the Ukrainian National Bar Association, notaries — the Notarial Chamber of Ukraine, and physicians).

The declaration does not state membership (membership in bodies) in the following organizations (associations):

• political parties;
• religious organizations;
• trade unions;
• homeowners' associations of an apartment building;
• associations of local self-government bodies and their voluntary associations;
• associations of private-law legal entities that are not civic associations;
• bodies of judicial and prosecutorial self-government.

Information about membership in organizations (associations) or their bodies is stated as of the last day of the reporting period (as of 31 December of the reporting year for annual declarations). If the declaration subject was a member of an association or was part of its bodies but ceased that membership (participation in bodies) as of the last day of the reporting year, this information is not stated in the declaration.

If the declaration subject is a lawyer but the right to practise law has been suspended: under part 5 of Article 45 of the Law of Ukraine “On the Bar and Advocacy,” from the moment of taking the lawyer's oath every lawyer becomes a member of the Ukrainian National Bar Association. The UNBA unites all lawyers of Ukraine, so it should be considered a self-governing professional association of lawyers. Information about membership in such an association or about being part of its governing, audit or supervisory bodies must be reflected in the declaration in accordance with clause 12 of part 1 of Article 46 of the Law “On Prevention of Corruption.”

Right away I'll note: the declaration states only the work that the declaration subject performs or performed as secondary employment. Family members are not listed in this section.

Under clause 11 of part 1 of Article 46 of the Law, the declaration states information about a position or work performed or that was performed as secondary employment. This means that holding a position or working as secondary employment is reflected in the declaration if it started or continued during the reporting period — regardless of its duration.

So, if during the reporting period the declaration subject held a position or, for any length of time, performed work as secondary employment, and as of the last day of the period no longer holds that position (does not perform the work), such a position (work) must still be reflected in the declaration. The declaration states data about the position or work held (paid or not) performed under a contract, and the name of the legal entity or individual for whom the person works or worked as secondary employment.