[BUYING AND SELLING REAL ESTATE IN UKRAINE] 262
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for sale of certain residential real estate/certain categories of plots of land owned for more than 3 years (one sale within the reporting tax year) – 0% for sale of a second real estate object among certain residential real estate/certain categories of plots of land or an object owned less than 3 years – 5% for sale of a third and following real estate objects or in other certain cases – 18% for non-residents, an increased rate of 18% may apply in certain cases
2. Legal entities In general, paragraphs 1.2 and 1.3 (re: pension fund levy, state, notary and broker’s fees) apply to legal entities as well. In addition, it should be considered whether the transaction is subject to withholding tax (if the seller is a foreign legal entity), and to VAT. The statutory WHT rate is 15%; double tax treaty benefits are available in some cases. The VAT rate is 20%. As a general rule, the sale of land is VAT exempt, while the sale of other real estate objects is usually VAT-able. VIII. Agents The seller and purchaser can both use the services of a real estate agent (broker). Currently, the use of a real estate agent (broker) in Ukraine is voluntary. IX. Donation Real estate property can also be acquired by means of a donation agreement. Due to the specific nature of the donation, there are some cases when a donor can demand termination of the donation agreement (e.g., if the beneficiary intentionally committed a criminal offence against the life, health, property of the donor, his/her parents, wife (husband), or children). X. Share deal Real estate property can also be acquired by way of a share deal – acquiring a share/participatory interest in a company holding title to real estate property. In some cases, real estate acquisition through a share deal may be preferable for the purchaser due to the tax and other advantages of such a transaction. Sale of shares in a joint stock company or participatory interest in a limited liability company is not subject to VAT.
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Defence contribution (applies if PIT rate is not 0%): 1.5%
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1.2. Buyer (natural person):
• A pension fund levy of 1% (for certain types of real estate) 1.3. To be distributed between the parties upon their agreement:
state fee of 1%;
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notary fee (depends upon exact notary);
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• broker’s fee (depends upon exact broker, usually around 5%) As a general rule, the base for the above accruals is a contractual price, which shall be not less than the price identified by an independent appraiser. In some cases, the tax base for PIT and defence contribution purposes can be reduced by the expenses incurred upon acquisition of the respective real estate object.
ILN Real Estate Group – Buying and Selling Real Estate Series
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