Real estate related tax issues in Ukraine


Planning any transactions in Ukraine, especially those including the real estate, one (and especially a foreign corporate entity and/or a foreign natural person) should keep in mind, that such transactions have certain tax consequences.

There are several possible regimes of tax treatment for real estate transaction in Ukraine, which depend on status of the seller (as far as the rule is that taxed not the transaction itself, but profits received in the result of the same with certain exemptions).

Accordingly the real estate transaction can be tax treated using provisions of the Law of Ukraine "On Personal Income Tax" effective as of January 1, 2004 with numerous subsequent amendments, which are continuously included into the same by Ukrainian Parliament (Verkhovna Rada Ukrayiny) if the seller is the natural (resident or non-resident) person and using provisions of the Law of Ukraine "On Enterprise Profit Tax" effective as of January 1, 1995 with numerous subsequent amendments accordingly if the seller is the corporate (resident or non-resident) entity or a registered office (representation) of a foreign (non-resident) corporate entity in Ukraine.

The above two Ukrainian tax legal regulations provide different tax rules for resident and non-resident corporate entities and natural persons and accordingly the different tax rates, terms and conditions.

Therefore appropriate tax planning and consulting is to be considered as the essential element of any transaction (deal) in Ukraine, especially if the same includes the real estate and a foreign (non-resident) corporate entity or natural person. The best way to implement such tax planning is to obtain timely tax advice form a Ukrainian accountant or even better from a Ukrainian auditor or an audit company (which are considered to be the professional tax advisers in Ukraine).

The above information is provided herein in educational and informative purposes only. It is provided that you have to get appropriate legal advice as regarding the legal and other issues of your interest in Ukraine in order to have the exact, extensive and up-to-date legal and other related information.

Do not hesitate to contact us if you have any questions or issues of legal nature, our Law Firm is working for you and our experienced legal specialists are always ready to help providing the client with appropriate legal consultations, legal reports and summaries, reasonable legal advices and all the other required legal support, assistance, coverage and protection.

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