Tax discount for individuals
Taxpayer is entitled to tax discount based on consequences of the reporting tax year.
Tax discount for individuals who are not business entities is a documented amount (cost) of expenses incurred by a resident taxpayer in connection with the purchase of products (works, services) from resident individuals or legal entities during the reporting year, which is allowed to reduce total annual taxable income, received as a result of such reporting year in the form of salaries, in cases specified by the Code.
Salary is a basic and additional remuneration, other incentive and compensation funds, which are paid to the taxpayer on the basis of employment relationship.
Sub-paragraph 166.2.1 Paragraph 166.2 Article 166 of the Code stipulates that tax discount includes expenses actually incurred by the taxpayer during the reporting tax year, confirmed by relevant payment and settlement documents, in particular receipts, fiscal or commodity checks, revenue cash orders, identifying the seller of products (works, services) and individual applying for tax discount (of their buyer (recipient), as well as copies of contracts, if available, which must necessarily reflect cost of such products (works, services) and payment term for such products (works, services).
Pay attention! Copies of the specified documents (except for electronic settlement documents) are submitted together with tax declaration and originals of these documents are not sent to the controlling body, but are subject to being kept by the taxpayer during statute of limitations established by the Code.
Restrictions:
If by the end of tax year following the reporting one, the taxpayer has not used right to accrue tax discount based on consequences of the reporting tax year, such right is not be carried over to subsequent tax years (Sub-paragraph 166.4.3 Paragraph 166.4 Article 166 of the Code).
!!! Grounds for accruing tax discount with specific amounts are indicated by the taxpayer in annual tax declaration, which is submitted by December 31 (inclusively) of the following tax year.
Amount of tax discount accrued to the taxpayer in reporting tax year cannot exceed amount of the taxpayer’s annual total taxable income, calculated as salaries, reduced taking into account provisions of Paragraph 164.6 Article 164 of the Code, except for case specified in Sub-paragraph 166.4.4 Paragraph 166.4 Article 166 of the Code (Sub-paragraph 166.4.2 Paragraph 166.4 Article 166 of the Code).
Amount of tax discount, accrued to the taxpayer in reporting tax year, in case of inclusion in tax discount of expenses provided for in Sub-paragraph 166.3.10 Paragraph 166.3 Article 166 of the Code, is calculated separately from other expenses and cannot exceed amount of the taxpayer’s annual total taxable income received in form of dividends, except for amounts of dividends that are not included in calculation of the total monthly (annual) taxable income (Sub-paragraph 166.4.4 Paragraph 166.4 Article 166 of the Code).
Expenses for which individual is entitled to receive tax discount based on results of 2023
| GROUND | EXPENSES | RESTRICTIONS |
| Sub-paragraph 166.3.1 Paragraph 166.3 Article 166 of the Code | Part of amount of interest paid for using a mortgage housing loan | Residential building (apartment, room), which is being built or purchased, must be defined as main residence place (Clause 3 of Paragraph 175.1 Article 175 of the Code). |
| Sub-paragraph 166.3.2 Paragraph 166.3 Article 166 of the Code | Donations or charitable contributions to non-profit organizations | Amount of contributions should not exceed 4% of the total taxable income for the reporting year |
| Sub-paragraph 166.3.3 Paragraph 166.3 Article 166 of the Code | Amount of funds paid to educational institutions to compensate for the cost of education | Payment in favor of domestic institutions of pre-school, out-of-school, general secondary, professional (vocational-technical) and higher education to compensate the cost of obtaining relevant education of such taxpayer and/or family member of the first degree of kinship and/or individual over whom guardianship or custody has been established, or who has been placed in a foster family, family-type orphanage, if such taxpayer has been appointed a guardian, respectively, foster father, foster mother, foster father, mother-teacher |
| Sub-paragraph 166.3.5 Paragraph 166.3 Article 166 of the Code | Insurance payments (contributions, premiums) under long-term life insurance contracts and pension contributions within framework of the non-state pension provision, contributions to a bank pension deposit account, pension deposits and accounts of participants in bank management funds, both of such taxpayer and family members of the first degree of kinship | Expenses incurred in 2023 must not exceed (calculated for each of the full or partial months of the reporting tax year during which insurance contract was in effect): - 3760.0 UAH in case of the taxpayer’s insurance; - 1880.0 UAH when insuring member of the taxpayer's family of the first degree of kinship |
| Clause 2 of Sub-paragraph 166.3.6 Paragraph 166.3 Article 166 of the Code | Amounts of expenses for payment of assisted reproductive technologies | Amount of expenses is included, not more than amount equal to a third part of income in the form of salaries for the reporting tax year |
| Clause 3 of Sub-paragraph 166.3.6 Paragraph 166.3 Article 166 of the Code | Amounts of expenses for payment of state services related to adoption of a child, including payment of state duty | There are no restrictions |
| Sub-paragraph 166.3.7 Paragraph 166.3 Article 166 of the Code | Amounts of funds paid in connection with conversion of a vehicle | Expenses related to conversion of vehicles owned by the taxpayer, using mixed motor fuel, bioethanol, biodiesel, compressed or liquefied gas, other types of biofuel. Herewith, the converted vehicle must be re-registered in relevant authorities. |
| Sub-paragraph 166.3.8 Paragraph 166.3 Article 166 of the Code | Amounts of expenses for payment of expenses for construction (purchase) of affordable housing, defined by the law, including for repayment of preferential mortgage housing loan granted for such purposes and interest on it | Expenses incurred under the state programs for construction (purchase) of affordable housing |
| Sub-paragraph 166.3.9 Paragraph 166.3 Article 166 of the Code | Amount of funds in the form of rent under housing (apartment, house) rental agreement compiled according to requirements of current legislation, actually paid by the taxpayer who has status of internally displaced individual. | Taxpayer has a right to use discount only on the condition that he/she and/or family members of the first degree of kinship: do not own habitable residential real estate located outside the temporarily occupied territory of Ukraine; do not receive budget payments to cover living expenses provided for by Ukrainian legislation. Amount of such discount cannot exceed (calculated per calendar year) 30 times the minimum salary established on January 1 of the reporting (tax) year (in 2023).
|
| Sub-paragraph 166.3.10 Paragraph 166.3 Article 166 of the Code | Amount of the taxpayer's expenses for acquisition of shares (other corporate rights), issuer of which is legal entity that has acquired status of a resident of Diia City according to Part 3 of Article 5 of the Law of Ukraine "On stimulating development of digital economy in Ukraine". | Provided that such expenses were incurred by the taxpayer before the issuer acquired status of Diia City resident or during period when such Diia City resident met requirement established by Paragraph 3 of Part 3 Article 5 of the Law of Ukraine "On stimulating development of digital economy in Ukraine" |
