UKRAINE Law and Practice Contributed by: Timur Bondaryev, Maryna Sharapa, Andrii Pidhainyi and Olena Yurets, Arzinger
established as of January 1st of the tax year per square metre. Based on the decisions of the local councils, certain privileges/exemptions may be applicable for specific locations. Land payment is a separate tax, paid in the form of a land lease (by tenants of leased public land plots) or as a land tax (paid by owners of land). 8.4 Income Tax Withholding for Foreign Investors Generally, foreign private individuals are subject to personal income tax (including income from a lease, and the sale of real estate) at a rate of 18% and a military levy at the rate of 1.5%. Receipt of the rental income for foreign private individuals is only possible through an agent (a legal entity or a private entrepreneur) located in the territory of Ukraine. The agent shall be involved through an agency agreement to conduct rental activity on behalf of the foreign individual. Personal income tax and a military levy shall be withheld from the rental income and paid to the State budget by the agent. Failure to have an agent for a foreign individual could be considered tax evasion and be subject to prosecution. Legal entities are subject to withholding tax on Ukraine-sourced income, which is levied at a rate of 15%, unless a relevant double tax treaty to which Ukraine is a party rules otherwise. This tax rate also applies to income from transac - tions (lease, sale and purchase) with real estate
located in Ukraine. The amount of withholding tax is deducted by the buyer from the purchase price before payment to a non-resident. Capital gains derived from the sale or other dis - posal of shares or corporate rights in a Ukrainian legal entity (as well as in a foreign legal entity that owns corporate rights of the legal entity in Ukraine), the value of which is 50% or more formed by real estate located in Ukraine, shall be taxed in Ukraine with withholding tax at the rate of 15%, unless a relevant double tax treaty rules otherwise. This rule also applies in the event that the sale or disposal transaction is carried out between two non-residents abroad. If the seller is a non-resident with a representa - tive office (RO) in Ukraine, the tax is paid by that RO. If there is no RO, the tax shall be paid by the purchaser (including a non-resident purchaser). 8.5 Tax Benefits With the exception of land, the cost of fixed assets used in business activities is capitalised and depreciated for corporate income tax pur - poses. Each fixed asset is accounted for sepa - rately and is depreciated on a monthly basis. Legal entities can determine the period of use - ful economic life of fixed assets in their internal accounting policies, provided that this period is not less than the minimum period prescribed by the Tax Code of Ukraine. Land and shares are not depreciable.
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