Tax on property income in Ukraine
Taxation Researcher | November 30, 2019
Effective Tax Rate on Rental Income
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Global Property Guide research
Nonresidents are taxed on their income from Ukrainian sources. Married couples are taxed separately.
Nonresidents are generally taxed at 18% on all their income from Ukraine, withheld at source.
In 2016, the minimum monthly salary is UAH1,450 (US$45), or UAH17,400 (€544) for twelve months.
Gross rental income earned by nonresidents is generally taxed at 18%. Rental agreements with a lessee-individual not registered as a private entrepreneur must be notarized.
When income from renting real estate is declared, the amount declared cannot be lower than minimum rental fee determined according to the methodology established by the Cabinet of Ministers of Ukraine, though the declared amount may of course be higher (if the real contractual rent is higher).
Non-resident landlord registered as a private entrepreneur
A nonresident landlord, as an individual entrepreneur, may opt for the simplified tax (unified tax) regime provided that his gross income does not exceed UAH500,000 (€15,625). Under this regime, the individual is required to pay lump sum amounts every month, typically between UAH20 (€0.63) and UAH200 (€6). The exact monthly liability, which serves as the individual´s income tax, depends on the municipality where the property is located.
CAPITAL GAINS TAX
Capital gains realized by nonresidents from selling real estate property are generally taxed at 18%. The taxable gain is computed as selling price less the acquisition cost of the property.
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.
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.
If the value of the property cannot be determined, land tax is levied at a specific amount per sq. m. The rate starts at UAH0.24 (€0.01) per sq. m. in towns with less than 3,000 residents and increases up to UAH3.36 (€0.11) per sq. m. in cities with more than one million residents. Zone coefficients from 1.2 to 3 are also applied for regional centers.
Property tax is levied as of 1 January 2012 at a rate equivalent to 1 minimum salary, depending on the size of the property. Residential property owners are liable to pay for property tax.
Income and capital gains earned by corporations are taxed at the standard corporate tax rate of 18%. All expenses incurred in respect of business activities are deductible for corporate tax purposes.