Timchenko Katerina Legal advice on doing business in Ukraine

Legal News: Tax on Real Estate may be reduced for individuals

10 May 2013

According to Art. 265.5.1 of Tax Code of Ukraine, which entered into force in January 1, 2011, the residential real estate is taxed for private individuals and legal entities, including non-residents, which are the owners of such an estate, in following order: if the residential area does not exceed 240 m² for apartments and 540 m² for dwelling-houses, the tax rate of Real Estate Tax cannot exceed 1 % of the minimum wage rate, which is valid on January 1 of the reporting (tax) year, per 1 m² of the residential real estate; and if the residential area is more than 240 m² for apartments and 540 m² for dwelling houses, the tax rate of Tax on real estate cannot exceed 2,7 % of the minimum wage rate.

     It should be noted that tax rates of Tax on real estate can vary in different regions of Ukraine as are established by local authority. The minimum wage rate in the 2013 equals to about USD 150.

     The provision of Ukrainian tax legislation, which stipulates the obligation of payment the Tax on real estate, inured in January 1, 2013. According to Letter of State Tax Service of Ukraine № 3724/6/17-3216 from March 11, 2013 and Art. 265.4 of Tax Code of Ukraine the privilege on payment the Tax on real estate is provided as a reduction (120 sq. m for apartments and 250 sq.m of dwelling houses) of tax base for residential real estate, which is possessed by private individuals. It’s important to remember that such reduction can be applied by tax payer only once per reporting (tax) period and is valid only for the objects of residential real estate, where the private individual is registered, or for any other object of residential real estate, which is in the possession of the tax payer.

     If private individual, who is tax payer of Real Estate Tax is willing to apply the privilege to the object of residential real estate, where he/she is not registered, but which is in his/her possession, the written request should be submitted to local tax authority at the place of registration up to July 1 of the current 2013 year. Such request can be submitted by tax payer or by an authorized person of tax payer, or it can be sent by mail with the acceptance slip and the description of the content, or even it can be sent by email in compliance with the conditions for registration of digital signature in accordance with current legislation.

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