Kyiv cracks down on tax evasion by Ukrainian oligarchs via Swiss banks

The Swiss courts have ruled in favour of the Ukrainian tax authorities in all the proceedings brought by Kyiv. Keystone / Peter Klaunzer

Ukrainian company directors are funneling their dividends to shell companies in Cyprus that move the money to Swiss banks. Kyiv has asked Bern to lift the veil on this type of arrangement in no fewer than seven cases.

Yuriy Kosyuk, 57, is a “Hero of Ukraine”, the country’s highest state honourExternal link. He held a senior position in the presidential administration under Petro Poroshenko in 2014, survivedExternal link successive political transitions and remains, under president Volodymyr Zelensky, one of Ukraine’s most powerful businessmen.

His company, MHP, is the country’s leading poultry producer. But since March 13, 2026, he can no longer count on Switzerland to shield his tax secrets from the scrutiny of Kyiv.

Kosyuk is the latest target in a wave of requests for mutual tax assistance between Switzerland and Ukraine. In a recent rulingExternal link, the Swiss Federal Court rejected an appeal by seven companies belonging to the MHP group seeking to prevent the Swiss tax administration from sharing information held in a Swiss bank to Kyiv.

A wave of requests to Switzerland

But the Kosyuk case is only one among many. According to research by Gotham City based on the archives of the Federal Administrative Court and the Federal Court, Ukraine’s tax authority has submitted no fewer than seven requests for mutual tax assistance to Switzerland since 2021, including five in 2024 alone.

Six of these concern a very specific tax avoidance structure that allows large Ukrainian companies to significantly reduce the tax owed in Kyiv on dividends and interest payments.

Cyprus: an empty shell

Instead of distributing profits directly to shareholders in Ukraine – which would trigger a 15% withholding tax – the companies transfer the money to a Cyprus-based entity officially listed as a shareholder or creditor. The tax treaty between Kyiv and Nicosia then reduces the rate to just 2% or 5%.

The problem is that the Cypriot company is often little more than a shell whose sole purpose is to collect the money. And its bank accounts are not held in Cyprus, but in Switzerland. This is where the documents – account statements, powers of attorney and the identity of the beneficial owner – are kept, proving that the ultimate beneficiary is Ukrainian and that the 15% rate should have applied.

Kyiv prevails

The rulings of the Swiss Federal Administrative Court reveal a recurring pattern. In a case decided in April 2026, Ukraine’s tax authority requested bank statements from four subsidiaries of a Ukrainian group that paid interest to a Cypriot shell company between 2019 and 2023 at the preferential rate of 2%. In another case, nearly $13 million (CHF10.6 million) in interest payments made between 2018 and 2021 came under scrutiny. In a third, a hydrocarbon trader is being targeted.

All seven proceedings resulted in decisions favourable to Kyiv. Four appeals were rejected outright, while three others were only partially upheld on procedural grounds. And when the only case to reach the Federal Supreme Court – the MHP case – was decided last March, the Ukrainian tax authorities again prevailed.

War effort

The reason for this crackdown on tax evasion is clear. Since the Russian invasion, Ukraine’s tax authority has become more than an administrative body. It is now a key component of the country’s war effort. Every employee contributes through a 5% military tax that is deducted from their salary.

In 2025, the tax service collectedExternal link 163.6 billion hryvnias (CHF2.9 billion) through the military tax – the equivalent of 22 days of defence spending. The 5% levyExternal link, introduced in December 2024 (up from 1.5% previously), does not apply to corporate profits but to all personal incomeExternal link and includes salaries, bank interest, rents and dividends paid in Ukraine.

And therein lies the irony: while the 5% military tax affects every Ukrainian payslip, it does not apply to the dividends that groups such as MHP channel to Switzerland through Cypriot shell companies. At least not until now.

More than 12,000 tax auditsExternal link were carried out in the first ten months of 2025. Another 4,500 audits are already planned for 2026.

Translated from French using AI/amva/ac

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