The “tax amnesty” or “zero declaration” due to martial law was extended until March 1, 2023.
Let’s analyze individual issues of declaration using examples.
Example 1)
If you have $15,000 in cash savings and common household items (furniture, clothing, etc.), do you have to declare them, and if so, how do you calculate the levy?
In any case, cash cannot be declared. If you still want to display money in the order of voluntary declaration, you must first deposit them in a special bank account. The procedure for opening and maintaining such special accounts is regulated by the National Bank of Ukraine.
Next, we determine the base for calculating the fee. To do this, you need to transfer funds into the national currency at the exchange rate on the date of submission of the declaration.
For example, the exchange rate on the date of declaration (for example, 02.09.2021) is UAH 27/USD, then:
USD 15,000.00 x UAH 27/USD = UAH 405,000.00.
The amount to be paid (at the base rate) is UAH 20,250.
As for the rest of the assets (furniture, clothes), there is a possibility that such property may be considered by tax officials as “valuable movable property”, because the list of declared objects is inexhaustible. However, if you had a source of income until 2021 (worked in some years officially, albeit with a minimum wage), we believe that it will be possible to justify that such “ordinary” assets were purchased by you with “legal” (already taxed) income in the form of, in particular, salaries. Therefore, we do not see the need to declare “ordinary” household assets (furniture, clothes, gadgets, etc.).
Example 2)
If a person owns three apartments: one inherited (130 m2), the second purchased abroad (40 m2), the third – under the conditions of investment in a building in Kyiv, which has not yet been put into operation (80 m2). The source of income for the purchase of the last two cannot be established.
An inherited apartment is not subject to voluntary declaration, as only assets purchased for previously untaxed income are reported.
Therefore, the area of the residential premises for voluntary declaration will be 120 m2 (sum of two purchased apartments: 80 m2 + 40 m2). At first glance, a total of 120 m2 of several apartments will not be checked by the tax office. But this is not so, because: firstly, it concerns only the property of persons who did not submit a declaration, secondly, it concerns only objects located on the territory of Ukraine. Therefore, the apartment abroad must be displayed, and since you are already submitting a declaration, other property is also subject to the fee. Otherwise, if the declaration is not submitted, and the tax office later finds only an apartment in Ukraine, then responsibility should not arise, because its size is 80 m2.
The law is formulated ambiguously and questions will arise whether it is possible not to pay the fee for, in this case, 80 m2, because the law supposedly allows you to own 120 m2 in Ukraine, which were not declared. Whereas the legislation clearly establishes the conditions for paying real estate tax, according to which the tax base for an apartment is reduced to a preferential 60 m2. This law does not contain such a condition.
For the purposes of declaring both apartments, the basis for determining the amount of the fee is the value of the apartment. In addition, the value of an object located outside Ukraine, unlike the value of an object located on the territory of Ukraine, must be duly documented. Therefore, it is necessary to carry out an assessment of such property abroad as of the date of declaration (you need to address to experts in valuation, we can help you finding them), declare and, under the basic conditions, within 30 days pay a fee at the rates: 7% of the appraised value of the apartment abroad and 5% of the independently specified value of property rights for an 80 m2 apartment in Kyiv.
Example 3)
How to evaluate the acquisition of an asset, if you purchased a car for personal use for UAH 500,000.00 5 years ago, and now it will cost UAH 300,000.00. Which price to apply? In addition, the property has a car purchased in 2020 worth more than UAH 1,000,000.00 with funds received at the official place of employment or as a private employer.
A car purchased in 2020 is not considered an object of voluntary declaration, since the income for its purchase is received as a salary, from which the employer has paid taxes and fees in full, or it is the taxable income of your private entrepreneur (‘FOP’).
The value of another vehicle for declaration purposes is determined on the date of submission of the declaration (ie, between UAH 500,000.00 and UAH 300,000.00, choose the current UAH 300,000.00). If there is no other property subject to declaration, then the declaration may not be submitted, because the value of the vehicle will be less than UAH 400,000.00. This rule will apply on the condition that such a vehicle does not fall under other technical criteria, i.e. it is designed to transport no more than 9 people, with an engine cylinder capacity of no more than 3,000 cubic centimeters.
Therefore, the question “to declare or not to declare” will arise quite often, because each case is special.