Law of Ukraine No. 3050-IX as of 11.04.2023 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding exemption from payment of the environmental tax, land payment and tax on immovable property other than land plot, for destroyed or damaged immovable property" (hereinafter – Law No. 3050) entered into force on 06.05.2023. https://tax.gov.ua/zakonodavstvo/podatkove-zakonodavstvo/zakoni-ukraini/78176.html
Law changed mechanism for determining list of territories where hostilities are (were) taking place or temporarily occupied by the Russian Federation (hereinafter – List of territories). Law No. 3050 stipulates that list of territories is determined according to procedure established by the Cabinet of Ministers of Ukraine (Sub-paragraph 69.22 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Tax Code of Ukraine (hereinafter - Code)).
Resolution No. 1364 of the Cabinet of Ministers of Ukraine as of 06.12.2022 (hereinafter - Resolution No. 1364) determines some issues of forming list of territories on which hostilities are (were) taking place or temporarily occupied by the russian federation. In particular, Paragraph 1 of Resolution No. 1364 defines the executive authority (Ministry for Reintegration of Temporarily Occupied Territories), which is delegated authority to approve list of territories, and also defines components of list of territories, requirements for the format of territories by which these territories are reflected in the list, and approved form of list of territories.
Considering the above specified, in sense of the Law No. 3050, Resolution No. 1364 can be considered as having established procedure for determining List of territories.
In this regard, the List of territories approved by the Order of the Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine No. 309 as of 22.12.2022, registered in the Ministry of Justice of Ukraine on 23.12.2022 under No. 1668/39004 (hereinafter - Order No. 309), may be applied for payment of real estate tax other than land plot (hereinafter - Tax) in the respective territories.
Sub-paragraph 69.22 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code stipulates that do not charge or pay Tax:
1) for the real estate objects located in territories of active hostilities or in territories of Ukraine temporarily occupied by the russian federation:
| individuals | for 2021 and 2022 - for residential real estate objects; from March 1, 2022 to December 31, 2022 - for non-residential real estate objects; in 2023 - from the first day of a month in which date of start of active hostilities or temporary occupation was determined for respective territories, to the last day of a month in which hostilities or temporary occupation in the respective territory ended; |
| legal entities | from March 1, 2022 to December 31, 2022; in 2023 - from the first day of a month in which date of start of active hostilities or temporary occupation was determined for the respective territories, to the last day of a month in which hostilities or temporary occupation in the respective territory ended. |
For purposes of paying Tax in 2022, Order No. 309 is applied to the extent of presence of a certain territory in the List of territories approved by Order No. 309 in its current version (with changes). Dates of start and end of active hostilities or temporary occupation are not taken into account.
Dates of start and end of active hostilities or temporary occupation in 2023 are determined according to data of the List of territories, approved by Order No. 309 in the current version (as amended).
Attention! Order No. 309 in section I approved territories of possible hostilities (part one) and territories of active hostilities (part two), in section II approved territories of Ukraine temporarily occupied by the russian federation. Therefore, for purposes of paying Tax according to Sub-paragraph 69.22 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code applies only to the List of territories of active hostilities (part two of chapter I) and temporarily occupied by the russian federation (chapter II).
2) for destroyed objects of residential and/or non-residential real estate as a result of hostilities, acts of terrorism, sabotage caused by the armed aggression of the russian federation against Ukraine, based on data of the State Register of Property Damaged and Destroyed as a result of hostilities, acts of terrorism, sabotage caused by armed aggression of the russian federation against Ukraine (hereinafter – Property Register):
| individuals | for 2021 and subsequent tax (reporting) periods - for objects destruction data of which is entered in the Property Register; |
| legal entities | for 2022 and subsequent tax (reporting) periods - for objects destruction data of which is entered in the Property Register; |
3) for damaged objects of residential and/or non-residential real estate (such as those in need of capital repair, reconstruction or restoration as a result of hostilities, acts of terrorism, sabotage caused by the armed aggression of the russian federation against Ukraine) based on data from the Property Register:
| individuals | for 2021 and subsequent tax (reporting) periods - for residential real estate objects damaged in 2022, data on the damage of which is entered in the Property Register, until the beginning of a month following the month in which, according to the Property Register, residential objects properties recognized as habitable; for a period from March 1, 2022 and subsequent tax (reporting) periods - for non-residential real estate objects damaged in 2022, and data on the damage of which is entered in the Property Register, until the beginning of a month following the month in which, according to the Property Register, non-residential real estate objects were recognized as suitable for use for their intended purpose; for the real estate objects damaged starting from January 1, 2023, from the first day of a month in which damage to the real estate was recorded according to the Property Register, until the first day of a month following the month in which, according to the Property Register, the real estate objects were recognized as habitable/for use as intended; |
| legal entities | from March 1, 2022 and subsequent tax (reporting) periods - for residential real estate objects damaged in 2022, data on the damage of which is entered in the Property Register, until the beginning of a month following the month in which, according to the Property Register, the residential real estate objects were recognized as habitable; for a period from March 1, 2022 and subsequent tax (reporting) periods - for non-residential real estate objects damaged in 2022, and data on the damage of which is entered in the Property Register, until the beginning of a month following the month in which, according to the Property Register, non-residential real estate objects were recognized as suitable for use for their intended purpose; for real estate objects damaged starting from January 1, 2023, from the first day of a month in which damage to the real estate was recorded according to the Property Register, until the first day of a month following the month in which, according to the Property Register, the real estate objects were recognized as habitable/for use according to their intended purpose. |
Also, Sub-paragraph 69.22 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code stipulates that in relation to residential/non-residential real estate objects, including their shares, which have suffered minor damage, suitable for residence/use for their intended purpose (respectively), the local self-government bodies, military administrations or military-civilian administrations have a right to:
1) set tax rates for the real estate other than land, in amount lower than amount established by decision of relevant local self-government body for a certain type of real estate objects, payable in the relevant territory;
2) exempt from payment of tax.
Law No. 3050 defines the possibility of clarifying tax obligations for taxpayers who, before the date of entry into force of the Law No. 3050, declared tax obligations for 2022-2023 for residential and/or non-residential real estate located in territories of active hostilities or in the territories of Ukraine temporarily occupied by the russian federation, included in the List of territories. Such taxpayers have a right to adjust accrued tax liabilities for 2022 and 2023 by submitting clarifying tax declarations for the corresponding p
Tax obligations for 2023 are specified according to periods of the beginning and end of active hostilities or temporary occupation in the respective territories.
Tax payers who did not declare their tax obligations in 2022-2023 for tax objects located in territories not included in Order No. 309, or located in the territory of possible hostilities approved by Order No. 309, must declare relevant tax obligations.
Annual amount of payment for real estate objects is determined in proportion to the number of months when such real estate objects were subject to taxation.
Application of financial sanctions and penalties:
Procedure for payer to fulfill obligations during the martial law, in particular, regarding compliance the deadlines for payment of taxes and levies, submission of reports, is established by Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Code (hereinafter - Sub-paragraph 69.1).
Clause 14 of Sub-paragraph 69.1 stipulates that in case of the taxpayer’s self-correction, in compliance with procedure, requirements and restrictions specified in Article 50 of the Code, errors that led to the understatement of the tax liability in the reporting (tax) periods falling during the martial law, such taxpayers are exempted from accrual and payment of financial sanctions provided for in Paragraph 50.1 Article 50 of the Code, and penalty.
That is, Tax payers who submit to the controlling bodies clarifying tax declarations for the reporting (tax) periods falling during the martial law will not be charged with financial sanctions and penalty.
Compiled, sent (delivered) tax notifications-decisions on the Tax payment amounts, on which Tax is not accrued and not paid, are subject to cancellation (withdrawal), and the monetary obligations and tax debt determined by the controlling body are subject to cancellation.
Overpaid sums of Tax are credited exclusively in future payments of this Tax, and in case that such payer has tax debt from the Tax, overpaid sums are credited in the repayment of such debt.