The Supreme Court held that for a court to authorize the disclosure of banking secrecy, the tax authority must demonstrate the objective impossibility of conducting a tax audit and confirm that all other measures prescribed by law have been exhausted. Merely noting the taxpayer’s absence during a single inspector visit or failing to receive a response from the police regarding a search request does not prove that tax oversight is impossible. Before applying to the court, the controlling authority is required to provide evidence that it took all measures to properly notify the taxpayer of the audit, specifically by sending a copy of the relevant order.
In Case No. 501/4276/25, the Main Directorate of the State Tax Service (STS) in the Zaporizhzhia region petitioned the court to disclose banking secrecy regarding a limited liability company’s accounts. Tax officials cited findings from actual inspections of gas stations in Zaporizhzhia, which revealed that the company was processing cashless payments via POS terminals during the sale of excisable goods.
The STS noted that a request for explanations and documents sent to the company was not delivered, and conducting an unscheduled documentary on-site audit proved impossible because neither the enterprise nor its officials were present at the registered tax address. Postal items were also returned after the retention period expired. According to the “Tax Block” information system, the company held accounts with MTB Bank. In response to the controlling authority’s inquiry, the bank stated that the requested information could only be provided pursuant to a court order. The courts denied the application because the applicant failed to provide evidence that a copy of the audit order had been sent to the taxpayer by mail in the manner prescribed by Article 42 of the Tax Code of Ukraine, nor did it prove that all measures had been taken to ascertain the taxpayer’s location. The Supreme Court upheld these rulings.
**Findings of the Supreme Court**
Information regarding bank accounts and the movement of funds constitutes banking secrecy; its disclosure to tax authorities pursuant to a court order (subparagraph 20.1.5 of paragraph 20.1 of Article 20 and paragraph 73.4 of Article 73 of the Tax Code of Ukraine; Article 62 of the Law of Ukraine “On Banks and Banking”) is permissible only if circumstances are proven that render it impossible to conduct audits under the standard procedure. Pursuant to paragraph 81.1 of Article 81 and Article 42 of the Tax Code of Ukraine, the right to conduct an unscheduled documentary on-site audit arises only after a copy of the audit order has been served to the taxpayer. In the absence of a declaration opting to use the “electronic cabinet” system, such a copy must be sent via registered mail with return receipt requested. A record (act) stating the impossibility of conducting an audit merely documents a single visit by an inspector to the tax address; absent evidence that the order was mailed, such a record does not confirm the enterprise’s absence from that address. The Supreme Court explained that the Main Directorate of the State Tax Service in the Zaporizhzhia region failed to send a copy of the relevant order to the LLC by mail and did not receive a response to its inquiry to the police regarding the company’s whereabouts; consequently, it failed to prove the existence of circumstances preventing the audit or grounds for disclosing banking secrecy.
