Employer pays for employee’s housing: is it needed to pay taxes?

Press service of the State Tax Service of Ukraine, published 12 October 2026 at 10:11 Chapter: News

Payment by the employer for employee’s housing in certain cases may be considered as additional benefit – this is provided for by the Tax Code of Ukraine.

In what cases does taxable income arise?

1. Employee rents housing and the employer compensates for the expenses.

For example, person rents apartment, pays rent every month and the enterprise returns spent to it funds.

Such compensation is additional benefit to the employee and is taxable.

2. Employer rents apartment for employee himself.

Enterprise concludes housing lease contract and directly pays funds to the owner of apartment in which the employee lives.

In this case, the cost of paid accommodation is also considered as additional benefit of the employee and is taxable.

Important: even if payment or compensation for housing rent is provided for in the employment contract, this in itself does not exempt such income from taxation.

What taxes have to be paid?

In these cases, the following rates apply:

- 18% – personal income tax;

- 5% – military levy.

At the same time, if the employer himself rents and pays for housing for the employee, taxation rules of non-monetary income are applied to calculate personal income tax. This means that the employee receives income not in funds, but in the form of paid service – apartment accommodation.

Who pays taxes?

Employee does not need to calculate and transfer taxes to the budget on the own.

This is done by the employer as a tax agent. Employer calculates, withholds taxes from the employee’s income and transfers them to the budget.

Does employee need to submit declaration?

No. If taxes on such income are withheld by the employer, it is not necessary to submit annual assets and income declaration only due to payment or compensation for housing rent.

For reference: at the same time, separate rules apply to civil servants and other persons subject to financial control requirements. They are required to submit declaration according to the Law of Ukraine "On corruption prevention", particularly indicating information about their residence place, real estate use and received income.

Are there any exceptions?

Yes. Tax Code provides that the cost of free use of housing or other property owned by the employer is not taxed under this rule if its provision is:

- related to the employee’s performance of labor obligations according to the employment contract;

- provided for by a collective agreement;

- provided for by the law within limits established by it.

Herewith, these exceptions do not automatically apply to cases where the employer compensates the employee for costs of housing renting or rents apartment from another owner.