Calculating Losses in Financial Crimes: The Size Thresholds

The amount of loss is not merely a figure in an expert’s report. It is the value on which the very existence of criminal liability, the way the act is charged, and its gravity all depend. The same sum, under different circumstances, may mean either a tax dispute or a criminal case, either the “lighter” or the “heavier” part of an article — the threshold decides everything. Below, I explain as a forensic economic expert how the amount of loss is established in financial crimes, why it is measured in tax-free minimum incomes rather than in currency, and where both the investigation and the defence most often go wrong.

Why the amount of loss matters at all

Property and financial offences in Ukraine’s Criminal Code (KK) are built on thresholds: the law ties several consequences directly to a specific sum.

• Whether there is a crime at all. For some acts a small amount carries no criminal liability whatsoever — it is closer to a tax or administrative offence. Criminal liability arises only once the harm reaches a defined threshold.
• The specific part of the article charged. A significant, large, or especially large amount corresponds to different parts of an article, each with different sanctions.
• The gravity of the offence, and therefore the procedural consequences. Gravity governs limitation periods, pre-trial restraint measures, investigative jurisdiction, and the possibility of release from liability.

Because of this, precision here is not academic but decisive. The difference between a sum “just below” and “just above” a threshold is the difference between a dispute and a prosecution; the difference between the thresholds themselves is the difference between parts of an article. This is precisely why the amount of loss in cases under Article 191 (misappropriation, embezzlement, or taking property through abuse of office), Article 212 (evasion of taxes and duties), and Article 222 (fraud involving financial resources) of the Criminal Code of Ukraine is so often established through a forensic economic examination.

The unit of measurement — the NMDG and its dual meaning

The thresholds are expressed not in hryvnias but in tax-free minimum incomes of citizens (NMDG). And here lies a technical trap that even experienced lawyers stumble over.

The NMDG has two distinct values. In most everyday situations it is the historic figure of 17 hryvnias. But for the qualification of criminal (and administrative) offences, a separate rule in the transitional provisions of the Tax Code applies: the NMDG equals the tax social benefit for the relevant year. And the tax social benefit is 50% of the subsistence minimum for an able-bodied person, as set by law as of 1 January of that year.

From this follow practical consequences:

1. The hryvnia threshold is different every year, because the subsistence minimum changes. It must be calculated as of the date the act was committed, not as of a “convenient” date.
2. If the act is stretched across several periods, the amount for each year is counted separately, applying the NMDG of that particular year. Trying to use a single figure for the whole period is a classic mistake made by non-specialists.

So the first thing I settle in any engagement is which article the sum is being calculated for, and for which period — because both the multiplier and the hryvnia “rate” of the NMDG depend on it.

Different articles, different thresholds

Each article sets its own scale. Below are the reference points established by the notes to the relevant articles of the Criminal Code.

Article	What counts as the “amount”	Thresholds (in NMDG)
Art. 191 (misappropriation, embezzlement)	value of the property taken	significant damage — from 100 to 250; large amount — 250 and above; especially large — 600 and above (per the note to Art. 185)
Art. 212 (tax evasion)	taxes and duties that did not reach the budget	significant — 3,000 and above; large — 5,000 and above; especially large — 7,000 and above
Art. 222 (fraud with financial resources)	large material damage	the threshold for “large material damage” as a multiple of the NMDG is defined by law

A few caveats. For Article 191, “significant damage” is also assessed with regard to the victim’s financial situation, so it is not a purely arithmetic feature but partly an evaluative one. The numerical multipliers should always be checked against the current wording of the relevant article: the legislature revises them periodically (the Article 212 thresholds, in particular, were once raised), so one must work with the norm in force on the date of the act. And the crucial division of roles: the expert provides the precise sum and its ratio to the NMDG, while assigning the act to the “large” or “especially large” category as an aggravating feature is a legal assessment reserved for the investigation and the court.

Direct actual damage or lost profit: what counts as “the amount”

This is one of the key distinctions, and it shapes the entire methodology. The Civil Code (Art. 22) divides losses into real losses (what a person actually lost, plus the costs of restoring the infringed right) and lost profit (income the person could realistically have received under ordinary circumstances had the right not been infringed).

For criminal qualification of the amount, it is generally the direct actual damage that is taken — the real value of the property appropriated, or the sum that failed to reach the budget. Lost profit usually does not enter the “amount” used to charge the act: forgone income is proven separately and figures in a civil claim rather than in the formula for a criminal threshold.

The practical conclusion: attempting to “boost” the criminal amount with forgone profit is methodologically wrong. These two components rest on different evidence, and mixing them either overstates the figure or destroys the calculation entirely.

What the expert relies on — primary documents, not the investigator’s version

The core principle of an economic examination is documentary substantiation. A forensic economic examination is conducted under the Law of Ukraine “On Forensic Expert Activity” and the methodological guidance of the Ministry of Justice (the Instruction on the appointment and conduct of forensic examinations, Ministry of Justice Order No. 53/5). In a sound report there is not a single figure “pulled from the air”: every sum traces back to a specific source — an invoice, an act, a payment document, a bank statement, an accounting register.

This means the expert does not take on faith the sum named by the investigator and does not “fill in” a figure from the logic of a version or a party’s explanations. If the file contains a contract but no payment documents for its performance, the sum paid is not proven, and the correct outcome for that part is a conclusion that no answer can be given — not an “approximate” figure. This is not a refusal to work; it is an honest result that protects the report from being overturned in court. Data from different sources are also cross-checked against each other: the sum on an invoice must agree with the accounting entry and with the movement of funds shown by the statement.

A tax-authority assessment is not yet proven damage

The most common error in tax cases is equating the bottom-line figure of a State Tax Service (DPS) audit report with the “sum for the Criminal Code.” It is worth distinguishing the bodies themselves here: tax audits and additional assessments fall within the competence of the State Tax Service (DPS), whereas the pre-trial investigation of tax and related financial crimes is conducted mainly by the Bureau of Economic Security (BEB), often on information about suspicious transactions from the State Financial Monitoring Service (Derzhfinmonitoring). A DPS report is the position of the controlling body — a starting point, not conclusively established damage. It may contain:

• sums later reduced or cancelled through administrative or judicial appeal;
• assessments built on a conclusion about the “unreality” of transactions that still has to be proven;
• penalties and fines mixed in with the body of the tax itself.

For qualification purposes, what matters is the actual, documentarily confirmed failure of funds to reach the budget, not a figure mechanically carried over from the report. This is precisely why an examination is often ordered — to verify the report, not to rewrite it. The assessment in the report and procedurally proven damage are different quantities, and the two must not be confused.

The amount and the civil claim within criminal proceedings

The amount of loss affects not only the charge but also the civil claim that a victim (or a prosecutor acting in the state’s interests) may bring within the criminal proceedings — under the provisions of the Criminal Procedure Code of Ukraine (KPK) on civil claims (Art. 128 KPK). Such a claim is heard together with the criminal case, and its amount rests on the same documentary base.

An important nuance: unlike the “amount” used for qualification, a civil claim may include lost profit — but only where it is separately proven under the rules of civil or commercial procedure. In other words, a single examination may substantiate the direct actual damage for the charge and, at the same time, a broader sum of losses for civil recovery. These two figures need not coincide, and they should be kept deliberately apart.

Typical errors that distort the amount

Double counting

The same loss is counted twice — for example, when one transaction is seen both in the movement of goods and in the movement of funds, and both reflections are summed. Or when sanctions, which are already derived from the loss, are added to the body of the loss. The result is an artificially inflated sum that can “tip” the act over a threshold and change the charge. Each loss must be recorded exactly once.

Incorrect VAT treatment

A classic source of distortion. VAT is either baselessly included in the amount of damage or baselessly excluded. The rule of thumb is simple: the amount is the real loss of a specific person or of the budget. If the enterprise was entitled to a tax credit and actually used it, mechanically adding VAT to the loss overstates it. In tax cases, the body of the tax obligation is kept separate from penalties and fines — the latter are not tax and are not added to the amount when determining the size under Article 212. Every case requires a check of whether the party actually bore that portion as a loss.

The wrong valuation date

The amount of loss is a date-bound value. The same assets have different values in different periods, and the NMDG for qualification has a different hryvnia value each year. A calculation “at today’s prices” where the prices and NMDG of the event date are required distorts the result even with flawless arithmetic. That is why the date as of which the damage is determined is agreed at the very outset.

In brief: how to make the calculation robust

1. Identify the article and the periods — they govern the multiplier and the NMDG value.
2. Compute the NMDG through the tax social benefit of the relevant year, separately for each year.
3. Separate direct actual damage (for the charge) from lost profit (for the civil claim).
4. Trace every sum to a primary document; do not “fill in” what is unproven.
5. Do not equate the DPS report with proven damage; separate the body of the tax from sanctions.
6. Check the calculation for double counting, correct VAT treatment, and the right valuation date.

This approach makes the report robust: every figure can be verified and the reasoning reproduced. That is what distinguishes an expert calculation from a “by-eye” estimate that is easily rebutted at a hearing.

If you are a lawyer, an investigator, or a business owner and need an independent determination of the amount of loss — or a review of a calculation already in the file — it is worth seeking a consultation even before an examination is ordered. A precise sum, backed by documents and correctly matched to the thresholds, is the best protection both for the victim and for anyone contesting an inflated figure.