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Ukraine: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples are taxed separately.

INCOME TAX

Residents are taxed at a flat rate of 15% on all their income such as employment income, business and professional income, dividends, interests, royalties, income from immovable property, and capital gains. Income tax is generally withheld at source at the time of payment. However, income tax is levied by assessment for business income and partnership income.

Residents earning salary income can also avail of several allowances such as:

• donations to charitable organizations provided that total donations is more than 2% but less than 5% of the total taxable income for that tax period
• educational expenses incurred by the taxpayers incurred by the taxpayer and his immediate relatives up to UAH740 (€91) per month
• medical expenses incurred by the taxpayers and his immediate relatives except expenses for cosmetic surgery not related to medical treatment and certain dental care
• life and pension premiums paid by the taxpayer up to UAH740 (€91) per month for the insurance of the taxpayer and 50% of that amount or UAH370 (€46) any of his immediate relatives

Individuals whose monthly salary income from a single source does not exceed UAH890 (€110) are entitled to a personal monthly allowance of UAH257.50 (32) for 2008. In addition, special allowances are granted to single mothers, widows and widowers, war veterans, victims of the Chernobyl accident and disabled persons.

Resident landlord registered as a private entrepreneur

An resident landlord, as an individual entrepreneur, may opt for the simplified tax (unified tax) regime provided that his gross income does not exceed UAH500,000 (€61,587). Under this regime, the individual is required to pay lump sum amounts every month, typically between UAH20 (€2.46) and UAH200 (€25). The exact monthly liability, which serves as the individual’s income tax, depends on the municipality where the property is located.

CAPITAL GAINS TAX

As of 1 January 2007, capital gains realized from sale of dwellings (houses, apartments, summer houses) measuring 100 sq. m. or less are exempted from tax. A 1% tax is levied on the capital gains of dwellings with sizes exceeding 100 sq. m. The taxable gain is computed as selling price less the acquisition cost of the property.

Capital gains earned on the second and any additional sale of similar real estate property (any size) within the same tax year are subject to 5% tax.

VALUE ADDED TAX (VAT)

Value added tax is levied at a flat rate of 20%. Leasing a building, premises or land is subject to 20% VAT. The sale of buildings or premises is also subject to 20% VAT.

PROPERTY TAX

Land Tax

Land tax is levied on Ukrainian land and property at 1%, payable by the owners or users of the property. The taxable value is the property value at the beginning of the calendar year.

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