Property taxes in Ukraine

[Wayne]

Until recently, residential property owners in Ukraine did not need to pay any property tax whatsoever. At long last, however, the government has passed legislation designed to remedy this significant loophole in its ongoing tax collection efforts.
Henceforth, as of July 1, 2012, owners of apartments with residential area less than 240 square meters or private houses with residential area under 500 square meters, have to pay property tax in the amount of 1% of the minimal salary (currently 1,102 UAH; revised as of January 1 each calendar year) for each sq. meter of such living area. Moreover, owners of apartments with residential area in excess of 240 sq. meters and private houses with 500 sq. meters or more will now have to pay a tax in the amount of 2.7% of the set minimal salary for each sq. meter of residential area.
At the same time, Article 265 of the Tax Code of Ukraine grants some privileges related to paying this real estate tax. For instance, the taxation base may be reduced once per year for a single object owned by an individual as follows: for apartments – by 120 sq. meters; for residential houses – by 250 sq. meters. The final amount for individual owners will be determined by the local tax authorities based on information contained in the State Register of Immovable Property Rights, while legal entities will independently determine the real estate taxation base.
The above real estate tax must be paid once per year by individuals and once per quarter by legal entities. The amount is determined by the tax inspection at the place where such real estate is registered. Although this process has not yet been tested in practice, according to legislation it is fairly straight-forward: the tax inspection simply prepares "notification-resolution," which includes the necessary payment requisites, and sends it to the taxpayer at the actual address of the property prior to July 1st of each fiscal year. The individual taxpayers are obliged to pay the above-described tax within a 60-day period as of the date of receiving such notification-resolution.
If a taxpayer fails to pay this property tax within the established 60-day period, Article 126 of the Ukrainian Tax Code stipulates that such taxpayer shall be subject to a fine. According to tax inspection representatives, the amount of such fine is still under consideration among the state authorities. In addition, Article 129 of the Ukrainian Tax Code allows late payment fees to be imposed in case an individual taxpayer fails to effectuate the property tax payments within the established 60-day term.
In summary, as of July 1, 2012, each owner of a residential dwelling in Ukraine (apartments and houses) is required to pay property tax. While on the one hand, no one is eager to pay additional taxes, and face foreseeable disputes with the tax authorities, on the other hand, citizens of other civilized countries have been paying property taxes for decades. Therefore, this new addition to Ukrainian arsenal of taxation is in line with similar legislation in other nations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
 
So if I understand the article correctly, a small enough house or apartment would still pay no property taxes under the current laws?
For example, a house less than 250 square meters.

[Wayne]

Some more information:
 
comments on}April 26, 2013
 
The Cabinet of Ministers of Ukraine has proposed that in 2013 a tax on property other than land plots is not collated from individuals, as a certain period of time is required to form the register of taxpayers.
The initiative is stipulated in cabinet draft law No. 2405 on amendments to Article 265 of the Tax Code of Ukraine regarding residential property, which was revised for second reading. The major part of members of the parliamentary committee for customs and tax policies at a meeting on Wednesday recommended that Ukrainian parliament pass the bill at second reading, taking into account several amendments.
Tax agencies are to send a notification on verification of the number of residential properties and their living area to owners of property by July 1, 2013 to form the register. In turn, property owners by December 31, 2013 are to verify data obtained from tax agencies with information on the basis of documents on ownership rights to property. Then tax agencies within 10 days after the completion of the verification is to submit the information to tax agencies where the property is located.
The tax is paid in the place where property is located .According to the bill, property taxes can be calculated, taking into account the gross area of several property facilities in ownership of one individual (an apartment, a house. The taxation base is reduced by 370 square meters of the indicator. The benefit is given once for each basic taxation (reporting) period (year).
 
According to the current requirements, property tax is calculated separately for each facility if individuals have several types of property under ownership.
In addition, the government proposed that the tax scale should be differentiated more, foreseeing the introduction of a tax of 1% of the minimum wage per square meter for individuals who own various types of property, which combined gross area does not exceed 740 square meters and 2.7% if it exceeds 740 square meters.
Tax rates of no more than 1% for apartments with gross areas of no more than 240 square meters and houses with gross areas of no more than 500 square meters and 2.7% for apartments with gross areas of over 240 square meters and houses with gross areas of over 500 square meters.
The document also says that tax rates for companies are 1% for apartments that have gross areas that do not exceed 240 square meters and houses with gross areas of no more than 500 square meters, and 2.7% for apartments with gross areas of over 240 square meters and houses with gross areas of over 500 square meters. The government proposed that the term of submitting tax declaration for companies is prolonged until February 20, while today it is set until February 1.
The cabinet also proposed that the tax is calculated by tax agencies on the place of the taxation address (place ore registration) of individual owners of property, while according to current law, the tax is calculated for the place where property is located. The bill introduces a 10-day period during which tax agencies are to send a tax report decision after obtaining information on the appearance of ownership rights to the newly built facilities and if ownership rights to the facility are transferred to other owners within a calendar year.
In addition, the cabinet proposed that the current law is expanded with a requirement according to which individuals in rural areas can pay the tax via the cash desks of rural councils using a report on the acceptation of tax and duties.
The document also expands a list of citizens, who can obtain tax benefits for one facility, adding orphaned children, children deprived of parental care, and children with disabilities who are brought up by single mothers. In addition, the list was expanded to include residential facilities belonging to monasteries and convents and no more than two housing facilities of other religious organizations.
As reported, the Ukrainian parliament on April 4, 2013 passed at first reading bill No. 2405 on amendments to Article 265 of the Tax Code of Ukraine regarding residential property.
From January 1, 2013, Article 265 of the Tax Code of Ukraine took effect, according to which a tax on property other than land plots was introduced. The size of the tax on housing was based on living space, but not the gross area of the house.
Earlier the Cabinet of Ministers registered a draft law foreseeing the collection of property tax from the gross area of apartments and houses, not from living space. However, later it was decided that the bill on the calculation of the property tax using the gross area should be discussed by the parliament in connection with the bill on the introduction of a wealth tax on individuals.
 
UINVESTOR PERSPECTIVE
The article above provides uinvestors with important insights into Ukrainian economy and current situation with real property.  For those interested in learning more about Ukrainian real estate laws and regulations whether to have general knowledge or for business purposes, it is a useful summary overview.

 

[Wayne]

Some more informationa:
 
     New Taxation Rules with Respect to Real Property Tax in Ukraine
 
     Amount of the tax; Payment of the tax; The period for payment of the real estate tax;
Salans, Kyiv, Ukraine, Friday, February 15, 2013

February 2013
New taxation rules with respect to real property tax
We would like to remind you kindly that starting 1 January 2013 Article 265 of the Tax Code of Ukraine (the “Code”) came into effect with respect to the real property tax dealing with real estate property that is not land plots. Taxpayers shall be legal entities and individuals, including non-residents in Ukraine, being the owners of residential properties. The residential properties shall be:
а) A residential building – a capital structure constructed in compliance with the requirements set forth by law, other regulatory acts, and designated for permanent residence. The residential buildings shall be residential small-holding buildings and residential apartment buildings having various number of floors;
b) A residential smallholding building is a residential building located on a separate land plot and consisting of residential and non-residential premises;
c) An extension to a residential building is a portion of building located outside of the limits of its main outer walls and having one (or more) joint main wall(s) with the major portion of the building;
d) An apartment is separate premises in a residential building designated and available for permanent residence;
e) A cottage is a building having one or 1.5 floors and a small residential area used for permanent or temporary residence and having a household land plot;
f) Rooms in multi-family (communal) apartments are separate premises in the apartment where two or more tenants reside;
g) A garden building is a building used in summer (particular season) which in terms of the requirements to the covered area, external structures and engineering equipment does not comply with the standards set for residential buildings;
h) A dacha building is a residential building to be used throughout the year for countryside leisure.
Based on the definition of the “residential properties,” the list of properties subject to payment of tax does not include industrial and commercial properties (falling within the non-residential properties) and hotels.
Pursuant to Article 265.2.2 the tax is not paid for:
Ÿ Residential properties owned by state or territorial communities (their joint ownership);
Ÿ Residential properties located in exclusion areas and unconditional (mandatory) resettlement as set forth by law;
Ÿ Structures of a family type orphanage;
Ÿ Garden or dacha buildings (but their number should not exceed one such property per taxpayer);
Ÿ Residential properties owned by families having many children and foster families having three or more children, but their number should not exceed one such property per family;
Ÿ Dormitories.
Amount of the tax
Assessment base is the residential area of a residential real estate property.
The residential real estate property is subject to payment of tax at a tax rate set by the relevant village, settlement or town/city councils. For the residential apartments where the area thereof does not exceed 240 square meters, and the residential buildings of over 500 square meters, the real estate tax rate for the property not being a land plot must not exceed 1% of the minimum wage set as of 1 anuary of the accounting year. In case of an excess of the amounts of size of the above residential area the tax rate shall be 2.7%.
The Tax Service of Ukraine located in the region of the real estate property shall calculate the amount of real estate tax for the properties not being land plots.
Payment of the tax
Before 1 July of the accounting year, bodies within the State Tax Administration of Ukraine must deliver to the individual taxpayers a tax notice with the decision on the amount of the real estate tax. Should any question arise with respect to the amount of tax, the taxpayers are entitled to come to the Tax Administration of Ukraine to reconcile the data and settle the issues in dispute.
Real estate tax payers who are legal entities must independently calculate the amount of tax as of 1 January of the accounting year and by February of the same year deliver a return in the approved form to their body of the Tax Administration.
The period for payment of the real estate tax
According to the notice-decision the tax is to be paid as follows:
Ÿ Individuals shall pay within 60 days after delivery of the tax notice-decision;
Ÿ Legal entities shall pay in advance installments each quarter by the 30th date occurring after the accounting quarter, such installment shall be entered into the annual tax return.
 

[Slumba]

So it is 1100 grivna or thereabouts, for a typical smallish apartment?

[Wayne]

120 sq meters would equal 1291 sq feet. Most flats in Ukraine would be about 50 to 60 sq meters, so if the person only owns one flat, they would pay no taxes.
 
It is interesting that the tax is based on size alone, and not value of the flat or house.
 
 

[Wayne]

Here is more details:

In January 2013, a real estate tax was introduced, applying to residential property owners of apartments more than 120 sq. m. and residential buildings higher than 250 sq. m.
The tax rates for 2013 are:
 

• UAH 11.47 (US$ 1.41) per sq. m. for apartments with “living space” on, or less than, 240 sq. m. and residential buildings with living space on or less than 500 sq. m.

• UAH 30.97 (US$ 3.80) per sq. m for apartments with living space above 240 sq. m. and  residential buildings with living space above 500 sq. m.

 
“Living space” excludes kitchens, dining rooms, corridors, bathrooms, and storage rooms.
 
Say you have a 2000 sq foot flat. That would be 186 sq meters. 1.41 x 186 = $262 USD.

In USA, your tax could be 5, 10 or 15 times as much!