Tax Disputes Involving a Debtor in Bankruptcy Proceedings: The Supreme Court

The question of which court should hear a dispute between a debtor company and the tax authority has long remained one of the controversial issues at the intersection of tax law and bankruptcy proceedings. A tax notice-decision has traditionally been challenged before an administrative court, while the Code of Ukraine on Bankruptcy Procedures (CUBP) is based on the principle of concentrating property-related disputes involving the debtor within a single proceeding.

Following legislative amendments that took effect on 1 January 2025, this uncertainty was effectively removed. In its ruling of 14 July 2026 in case No. 904/5051/24 (904/420/26), the Commercial Cassation Court confirmed that a debtor’s claim seeking to declare a tax notice-decision unlawful and to have it cancelled must be heard by a commercial court within the framework of the bankruptcy case.

How the Jurisdictional Dispute Arose

The debtor, against which bankruptcy proceedings had already been opened, filed a claim against the Main Department of the State Tax Service in the Dnipropetrovsk Region seeking cancellation of a tax notice-decision.

The local commercial court refused to open proceedings, reasoning that a challenge to a decision of a tax authority fell within the jurisdiction of administrative courts. The appellate court overturned that ruling and returned the materials to the local court to decide whether proceedings should be opened. One of the key arguments was Part 3 of Article 3 of the Commercial Procedure Code, under which court proceedings are conducted in accordance with the law in force at the time the relevant procedural action is taken and the case is considered and decided.

By the time the debtor filed its claim, the new version of Article 7 of the CUBP was already in force.

What Changed in the CUBP

Part 1 of Article 7 of the CUBP provides that disputes involving a debtor are to be considered by a commercial court under the rules of the Commercial Procedure Code of Ukraine, taking into account the specific provisions of the Bankruptcy Code. Under Part 2 of the same article, the commercial court handling the bankruptcy case must resolve, within those proceedings, all property-related disputes involving the debtor.

Following amendments introduced by Law of Ukraine No. 3985-IX of 19 September 2024, the list expressly includes disputes concerning the determination and payment or recovery of monetary obligations — tax debt determined in accordance with the Tax Code of Ukraine.

The amendments entered into force on 1 January 2025.

Therefore, the mere fact that the opposing party is a tax authority no longer automatically places the dispute within administrative jurisdiction where bankruptcy proceedings have already been opened against the taxpayer.

Commercial Jurisdiction Became the Special Rule

Parallel amendments were also introduced to paragraph 8 of Part 1 of Article 20 of the Commercial Procedure Code of Ukraine, which defines the jurisdiction of commercial courts over bankruptcy cases and property-related disputes involving a debtor. The Commercial Cassation Court noted the relationship between the Commercial Procedure Code and the CUBP. Both have equal legal force, but the procedural provisions of the Commercial Procedure Code are general, while the CUBP rules governing disputes within bankruptcy proceedings are special.

Where a conflict exists, priority is given to the special regulation. Moreover, where inconsistent provisions have been adopted by the same legislative body, the principle of applying the later act also applies. In light of the amendments to both codes, the Supreme Court concluded that determining jurisdiction in such disputes after 1 January 2025 should no longer present significant difficulties: the legislature has established a mandatory rule requiring such cases to be heard by the commercial court within the bankruptcy proceedings.

Why Tax Disputes Are Concentrated Within Bankruptcy Proceedings

This approach reflects the broader logic of bankruptcy law. A tax dispute directly affects the amount of the debtor’s monetary obligations. Its outcome may influence the structure of creditors’ claims, the prospects of restoring solvency, the size of the liquidation estate and the satisfaction of other creditors’ claims.

If such a matter were considered separately in administrative proceedings, disputes affecting the same financial position of the debtor would effectively be divided between different jurisdictions. The amended CUBP follows the opposite model: the court handling the bankruptcy case should be able to form a comprehensive view of the company’s assets and liabilities.

What This Means in Practice

Once bankruptcy proceedings have been opened, jurisdiction is determined not only by the public-law nature of a tax notice-decision, but also by its financial impact on the debtor. If a dispute concerns the determination or payment of a tax liability of a company already subject to bankruptcy proceedings, it must be considered by the commercial court within those proceedings.

At the same time, the change in jurisdiction does not alter the substantive law. When assessing the legality of a tax notice-decision, the commercial court will continue to apply the provisions of the Tax Code of Ukraine. What changes is the procedural framework and the court responsible for resolving the dispute.

For debtors, the practical significance of the ruling also lies in the need to determine jurisdiction correctly at the stage of preparing a claim. Filing before the wrong court results in lost time, which in bankruptcy proceedings may directly affect the rights of both the debtor and its creditors.

A Single Forum for Property-Related Disputes

By its ruling of 14 July 2026 in case No. 904/5051/24 (904/420/26), the Commercial Cassation Court within the Supreme Court upheld the appellate court’s decision and confirmed that a dispute with a tax authority may be considered within bankruptcy proceedings. The position demonstrates the practical effect of the 2024 legislative amendments: once bankruptcy proceedings are opened, the commercial court increasingly becomes the single forum for property-related disputes affecting the debtor’s financial position, regardless of whether the opposing party is a private creditor, an employee or a tax authority.

The ruling of the Commercial Cassation Court within the Supreme Court dated 14 July 2026 in case No. 904/5051/24 (904/420/26) is registered in the Unified State Register of Court Decisions under No. 138223040.