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1) Property owners in Ukraine are now receiving notices from the tax office about the need to pay real estate tax. For what period is the tax due, and on what principle, according to the law, is it calculated? What is the tax amount and the minimum non-taxable area of property established by law?
Real estate taxpayers are individuals and legal entities, including non-residents, who own residential and/or non-residential real estate. The tax base is the total residential and non-residential real estate area, including its shares. The State Tax Service calculates real estate tax owned by individuals based on data from the State Register of Real Estate Rights and the originals of the relevant taxpayer documents, particularly documents on ownership. Tax on real estate owned by legal entities calculates the tax independently, based on the total area of each taxable object based on documents confirming ownership.
The reporting period for paying real estate tax is a year.
Tax rates for residential and/or non-residential real estate are set at an amount not exceeding 1.5 percent of the minimum wage established by law as of January 1 of the reporting (tax) year per 1 square meter of the tax base.
The minimum non-taxable area is established by Article 266.4.1. of the Tax Code of Ukraine, according to which benefits for owners of residential real estate for individuals – taxpayers are set at the following amount:
– for an apartment/apartments regardless of their number – per 60 sq. meters;
– for a residential building/buildings regardless of their number – per 120 sq. meters;
– for various types of residential real estate, including their shares (in the case of simultaneous ownership by the taxpayer of an apartment/apartments and a residential building/buildings, including their shares), – per 180 sq. meters.
If you own an apartment with an area of 65 sq. m., you will be taxed for five sq. m. of area. However, if you own a residential building with an area of 100 sq. m., you do not have to pay tax.
2) How is the real estate tax rate generally formed, who approves it, and where can I find information about the tax rate?
The village, settlement, and city councils decide the tax rate based on the location (zoning) and real estate types. Information about the tax rate can be found directly in the relevant council or on its official website. Decisions on establishing real estate tax rates are subject to mandatory publication.
3) How quickly do I need to pay the tax if I receive a notification (letter) from the tax office?
The deadline for paying real estate tax for individuals is 60 calendar days from the date of delivery of the tax notice-decision. Legal entities determine the amount of the tax and pay it independently, without waiting for tax decisions. Legal entities pay it in advance payments every quarter by the 30th of the month following the reporting quarter, which are reflected in the annual tax return.
4) Will there be fines and sanctions if I do not pay real estate tax on time? Can they block my bank account or submit an order to the enforcement service to forcefully collect property?
Tax authorities have the right to charge penalties for the amounts of taxes and fees paid late. Real estate tax other than land is no exception. In case of delay up to 30 calendar days inclusive, penalties of 10% of the tax debt amount are applied, in case of delay for more than 30 days – 20% of the debt amount.
If the tax is paid late, after the deadlines for its payment expire, a penalty of 120% of the annual rate of the NBU, effective on the day the tax debt arises, will be charged on the debt amount.
Tax authorities have the right to apply to the court with a claim to collect the amount of the taxpayer’s tax debt. The collection of tax debt by the court decision is carried out by the state enforcement service by the Law of Ukraine “On Enforcement Proceedings”. The forced collection of a tax debt is possible only based on a relevant court decision and an executive document issued based on such a court decision. The tools of the executors provide for the possibility of arresting accounts, forced collection, and property sale within the framework of enforcement proceedings.
5) To what address should the letter regarding real estate tax generally arrive and what should be done if, for example, the letter arrived last year and not this year?
Every year, by July 1, tax authorities send (deliver) to owners of real estate residential and non-residential property a tax notice – a decision on the payment of the tax amount, indicating the relevant payment methods, at the place of registration of the taxpayer details of village, town, and city councils, and to foreigners, such a notification is sent to the location of residential or non-residential real estate objects owned by them.
It is also worth noting that tax notifications-decisions on paying real estate tax can also be sent to taxpayers electronically. Taxpayers who submit reports in electronic form and/or have undergone electronic identification online in the electronic office can correspond with regulatory authorities by electronic means in electronic form in compliance with the requirements of the laws of Ukraine “On Electronic Documents and Electronic Document Management” and “On Electronic Identification and Electronic Trust Services”. Correspondence between tax authorities and taxpayers who have applied the desire to receive documents through the Electronic Office is carried out by electronic means by sending a document to the Electronic Office with the simultaneous sending to the taxpayer to his email address (addresses) of information about the type of document, date and time of its sending to the Electronic Cabinet.
Suppose you are using the Electronic Taxpayer’s Cabinet, for example, to submit reports regarding your entrepreneurial activity. In that case, you can receive an official e-mail with details and the amount to pay real estate tax.
6) What are the current benefits of paying real estate tax?
First, benefits are established for the areas of residential and non-residential real estate in the following amounts:
– for an apartment/apartment, regardless of their number – per 60 sq. meters.
– for a residential building/houses, regardless of their number – per 120 sq. meters.
– for various types of residential real estate, including their shares (in the case of simultaneous ownership of an apartment/apartment and a residential building/houses, including their shares), – per 180 sq. meters.
In addition, village, town, and city councils establish tax benefits paid in the relevant territory on residential and/or non-residential real estate owned by individuals or legal entities, public associations, charitable organizations, and religious organizations of Ukraine, the statutes (regulations) of which are registered following the procedure established by law, and are used to ensure the activities stipulated by such statutes (regulations).
Every year, by February 1 of the current year, village, town, and city councils submit information on benefits to the tax inspectorate at the residential real estate location. Tax benefits paid in the relevant territory on residential and non-residential real estate are determined for individuals based on their property status and income level. Tax benefits paid in the relevant territory on non-residential real estate depend on the taxed property.
7) Can they send a letter regarding the real estate tax payment if the real estate is in the occupied territory or destroyed due to military actions? What to do in this case?
Following clause 69.22 of clause 69, subsection 10, section XX “Transitional provisions” of the Tax Code of Ukraine, real estate tax is not charged and paid for destroyed residential and/or non-residential real estate objects as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the Russian Federation against Ukraine, based on data from the State Register of Property Damaged and Destroyed as a Result of Hostilities, Terrorist Acts, and Sabotage Caused by the Armed Aggression of the Russian Federation against Ukraine.
Similarly, the tax is not paid for real estate located in the territories of active hostilities or in the territories of Ukraine temporarily occupied by Russia until the last day of the month when the hostilities or temporary occupation of the relevant territory ended.
Also, the Tax Code of Ukraine stipulates that regarding residential/non-residential real estate, in particular their shares that have suffered minor damage and are suitable for residence/use for their intended purpose (respectively), local governments, military administrations, or military-civilian administrations have the right to:
1) establish tax rates on real estate other than land plots in an amount lower than the amount established by the decision of the relevant local government for a specific type of real estate, which is paid in the applicable territory.
2) exempt from paying tax.
If a taxpayer has received a tax notice-decision on the payment of real estate tax, other than land, for objects that were destroyed because of Russian aggression or are located in temporarily occupied territories, it is worth filing written objections to the tax inspectorate that issued such notice-decision.
If the tax authority does not respond or refuses to cancel the tax notice decision, the taxpayer has the right to file a complaint with the highest body of the State Tax Service of Ukraine with a demand to cancel the unlawful decision. If the taxpayer’s legal rights are not restored in the administrative appeal procedure, such a taxpayer has the right to file a lawsuit in court.
By ROMAN MYKHAILOVSKII Published in: FOCUS
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