Innovations in terms of land payment, tax on real estate other than a land plot and the single tax of the fourth group

In connection with the adoption of the Law of Ukraine No. 3050-IX dated April 11, 2023 "On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine on Exemption from Environmental Tax, Land Payment and Tax on Real Estate Other Than a Land Plot for Destroyed or Damaged Real Estate" (hereinafter - Law No. 3050), explanations on the innovations in the part of land payment and tax on real estate other than a land plot, as well as the single tax of the fourth group were posted on the STS web portal (information on the posting of materials is provided in Annex 1).

At the same time, in order to make taxpayers more aware of the innovations of Law No. 3050, in particular, regarding the exercise of rights and possible actions to resolve problematic issues related to the collection of taxes in the territories damaged as a result of the armed aggression of the Russian Federation, we would like to inform you about the possibility/necessity of submitting applications to local self-government or executive authorities about the potential contamination of a land plot with explosive objects, taking measures to enter it into the State Register of Property.

Regarding land payment.

The Tax Code of Ukraine (the "Code") sets out the grounds for not paying land fees not only for land plots located in the territory of active hostilities and temporarily occupied territories.

No land payment (land tax and rent) is payable for land plots contaminated with explosive objects (sub-clause 283.1.9 of clause 283.1 of Article 283, clause 2831.2 of Article 2831, clause 288.8 of the Tax Code).

The period when land plots are recognized as contaminated by explosive ordnance is defined as the period starting from the first day of the month in which the date of the start of the survey of the land plot by mine action operators falls, and ending on the last day of the month in which such land plots are recognized as suitable for use (clause 2831.2 of Article ²⁸³¹ of the Code).

The legal and organizational framework for mine action in Ukraine is set out in the Law of Ukraine "On Mine Action in Ukraine" No. 2642-VIII dated December 06, 2018 (hereinafter referred to as Law No. 2642). According to paragraph 10 of part one of Article 1 of Law No. 2642, mine action operators are authorized units of central executive authorities, enterprises, institutions and organizations, regardless of ownership, including international and foreign ones, involved in mine action activities.

In accordance with clause 2 of the Procedure for Keeping Records of Mine Action Operators, approved by the Resolution of the Cabinet of Ministers of Ukraine No. 1150 dated 03.11.2021, the secretariat of the National Mine Action Authority keeps records of mine action operators.

According to part two of Article 28 of Law No. 2642, mine action executors acquire the status of mine action operators from the moment they receive a certificate of conformity of mine action processes carried out by the mine action operator in accordance with the current legislation.

According to the Main Department of Mine Action, Civil Protection and Environmental Safety of the Ministry of Defense of Ukraine, 18 mine action operators have already been certified in Ukraine.

An application for demining is submitted to the Ministry of Defense.

In order to submit an application for humanitarian demining (reporting mined or suspected mined fields, as well as in case of detection of hit or abandoned equipment, unexploded shells or their fragments, etc.), one should go to Military.feodal.online and log in by phone number.

Please note that the Code also provides for the recognition of land plots as contaminated with explosive ordnance for land plots located in the territories where active hostilities are (were) conducted or temporarily occupied by the Russian Federation .

For such land plots, the procedure for recognizing them as contaminated with explosive objects is different - from the first day of the month following the month in which active hostilities or temporary occupation in the relevant territory is completed, provided that the land fee payer submits an application to the local government, military administration or military-civilian administration about the potential contamination of the land plot with explosive objects and such local government, military administration and/or ^military

If there are such land plots, in order to exercise its right to exemption from payment of land fees, a business entity must submit an application to a local government body, military administration or military-civilian administration on potential contamination of the land plot with explosive objects.

Based on such application, the local self-government body, military administration or military-civilian administration must make a decision on establishing tax exemptions for the payment of local taxes and fees in respect of the land plot (hereinafter - the Decision) (subparagraph 283.1.9 of paragraph 283.1, paragraph 288.8 of the TCU).

We note that as regards the land tax for such land plots, paragraph 2831.2 of Article 2831 of the Code stipulates that the basis for not charging the land tax is the data of the State Land Cadastre.

The procedure for maintaining the State Land Cadastre was approved by the Resolution of the Cabinet of Ministers of Ukraine No. 1051 dated October 17, 2012 (hereinafter - the Procedure No. 1051).

In addition, no land payment (land tax and rent) is paid for land plots that are unsuitable for use due to the potential threat of contamination by explosive objects (clauses 283.2, ²⁸³¹.3, 288.8 of the Tax Code). For such land plots, the basis for exemption from taxation is a Decision made on the basis of the taxpayer's application.

In other words, if such land plots are available, a taxpayer's application on potential contamination of the land plot with explosive objects must be submitted to the local government, military administration or military-civilian administration.

The period during which the land payment is not charged is from the first day of the month on which the date of the Decision falls to the last day of the month on which the date falls, or the last day of the period for which the exemption from local taxes and/or fees was granted in accordance with the Decision (including amendments to such Decision), or the date of cancellation of the relevant Decision, or the date of commencement of the survey of the land plot by mine action operators or recognition of the land plot as suitable for use.

At the same time, we would like to inform you that the Resolution of the Cabinet of Ministers of Ukraine No. 1333 dated December 19, 2023 approved the Procedure for Submission of Information on Decisions on Establishment of Tax Benefits for Payment of Local Taxes and/or Fees, adopted on the basis of applications of taxpayers for recognition of land plots as unfit for use due to the potential threat of their contamination by explosive objects.

Regarding the tax on immovable property other than a land plot (the "Tax").

According to subparagraph 69.22 of clause 69 of subsection 10 of section XX of the Tax Code of Ukraine, the tax is imposed on residential and/or non-residential real estate destroyed or damaged (as requiring major repairs, reconstruction or restoration) as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the Russian Federation against Ukraine, The tax shall not be accrued and paid on the basis of the data of the State Register of Property Damaged and Destroyed as a Result of Hostilities, Terrorist Acts, Sabotage Caused by the Armed Aggression of the Russian Federation against Ukraine (hereinafter referred to as the Register of Property).

The procedure for maintaining the Property Register was approved by CMU Resolution No. 624 of June 13, 2023.

The procedure for submitting an information report on damaged and destroyed real estate as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the Russian Federation against Ukraine (hereinafter referred to as the information report), approved by the CMU Resolution No. 380 of March 26, 2022 (hereinafter referred to as Procedure No. 380).

The information notice may be submitted to the Property Register:

1) independently by an individual or a representative of a legal entity:

- by means of the Unified State Web Portal of Electronic Services (hereinafter referred to as the Diia Portal) in accordance with the procedure set forth in paragraphs 6 and 7 of Procedure No. 380;

- using the mobile application of the Diia Portal (Diia) in case of availability of the registration number of the taxpayer's account card in accordance with the procedure set forth in paragraph 6 of Procedure No. 380;

2) through the administrator of an administrative services center or a notary in accordance with the procedure set forth in paragraph 8 of Procedure No. 380.

Submission of an information notice is carried out regardless of the place of residence or stay of an individual or the location of a legal entity.

Paragraph 5 of Procedure No. 380 contains a list of data that must be included in the information notice.

With respect to residential/non-residential real estate, including their shares, which as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the Russian Federation against Ukraine have suffered minor damage, are suitable for living/use for their intended purpose (respectively) and are subject to restoration by means of routine repairs, on the basis of the powers granted by subparagraph 69.22 of paragraph 69 of subsection 10 of Section XX of the TCU, local governments, military administrations or military-civilian administrations have the right to:

1) to set the Tax rates in the amount less than the amount of the Tax established by the decision of the relevant local self-government body for a certain type of real estate objects paid in the respective territory;

2) exempt from the Tax.

The Taxpayers may apply to the local self-government authorities or military/military-civilian administrations to establish the Tax rate for their own real estate.

Regarding the single tax of the fourth group.

Article ²⁹²¹ of the TCU provides for the specifics of determining the object and tax base of the fourth group single tax payers.

The areas of land plots contaminated with explosive objects or unsuitable for use due to the potential threat of their contamination with explosive objects are not subject to the single tax for single tax payers of the fourth group for the period when the land plots were contaminated with explosive objects or for the period when the land plots were recognized as potentially contaminated with explosive objects (paragraph three of clause ²⁹²¹.1 of the TCU).

The period when the land plots were contaminated with explosive objects is defined as the period starting on the first day of the month in which the date of the start of the survey of the land plot by mine action operators falls, and ending on the last day of the month in which such land plots are recognized as suitable for use (paragraph seven of clause ²⁹²¹.1 of the TCU).

For land plots located in the territories where active host ilities are (were) conducted or temporarily occupied by the Russian Federation, the period when land plots are recognized as contaminated with explosive objects is defined as the period starting from the first day of the month following the month in which active hostilities or temporary occupation in the relevant territory is completed (including when the date of commencement of the survey of the hazardous territory by mine action operators occurs after the date of completion of hostilities or ^temporary occupation).

The period when the land plots are recognized as potentially contaminated with explosive objects is defined as the period starting from the first day of the month in which the date of adoption by the village, town, city council, military administration or military-civilian administration of the decision to grant tax exemptions from local taxes and fees based on the taxpayer's application and ending on the last day of the month in which the earlier date falls - or the last day of the period for which the tax exemption is granted.

Thus, in order to exclude land plots that have been contaminated/recognized as potentially contaminated with explosive objects from the object of taxation by the single tax of the fourth group, the taxpayer must submit an application to the local self-government body, military administration and military-civilian administration on the potential contamination of the land plot with explosive objects and receive a decision from such body on the establishment of tax exemptions for the payment of local taxes and fees in respect of the land plot.

Annex 2 provides an indicative scheme of actions for legal entities to obtain grounds for non-calculation and non-payment of land tax, tax on real estate other than land as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the Russian Federation against Ukraine.

Additional materials

Annex 1

Annex 2