Lead Legal Counsel, Legal Department BGV Group Management
Taxation of charity assistance is a significant issue during wartime when Ukrainian and international charities provide support to the population affected by the Russian armed aggression against Ukraine.
Ukrainian tax law requires individuals to pay personal income tax (PIT) and a military levy on charity assistance received.
Let’s try to look into this issue together.
Lead Legal Counsel, Legal Department BGV Group Management
Taxation of charity assistance is a significant issue during wartime when Ukrainian and international charities provide support to the population affected by the Russian armed aggression against Ukraine.
Ukrainian tax law requires individuals to pay personal income tax (PIT) and a military levy on charity assistance received.
Let’s try to look into this issue together.
The procedure for taxing individuals’ income is regulated by Chapter IV of the Tax Code of Ukraine (TCU). According to subparagraph 163.1.1, paragraph 163.1, Article 163 of the TCU, a resident’s taxable income includes their total monthly (annual) income.
Generally, Article 170.7.1 of the TCU states that charitable, including humanitarian assistance (hereinafter referred to as charity assistance), received in the form of money or property (free services or work) is not taxed and is not included in the total monthly or annual taxable income.
However, there are exceptions where the recipient of the charity assistance MUST file a tax return and pay the required taxes and fees.
Subparagraph 170.7.3, paragraph 170.3, Article 170 of the TCU specifies that non-targeted charity assistance is not included in taxable income if it does not exceed the amount set by subparagraph 169.4.1, paragraph 169.4, Article 169 of the TCU, as of January 1 of the reporting year (in 2024, this amount is 4,240 hryvnias).
If the total amount of non-targeted charity assistance received during the reporting year exceeds 4,240 hryvnias in 2024, the individual must file an annual tax return indicating the amount received.
Income exempt from inclusion in total taxable income (not subject to tax, taxed at zero rate) is also exempt from the military levy. However, if taxable, the military levy must also be paid.
Therefore, the recipient of charity assistance must pay income tax at 18% and a military levy at 1.5% on the amount exceeding the established limit (4,240 hryvnias in 2024).
The charity providing the assistance acts as the tax agent, calculating, withholding, and remitting the taxes on the income deposited (paid or given) to the taxpayer to the relevant budget.
However, when receiving assistance from multiple charities, individuals should remember that each charity does not have information about received aid from others. Consequently, tax authorities may reassess income tax and military levy based on the annual financial report, and the recipient will be responsible for paying these taxes.
Given the above, we recommend responsibly paying taxes, calculating them correctly, using the taxpayer’s electronic office services, or consulting with fiscal authorities. Remember, timely and correctly paid taxes support the national budget during difficult wartime.
Additionally, note that Ukrainian law provides certain tax benefits for specific categories of individuals (e.g., those affected by the armed aggression of the Russian Federation during martial law or state of emergency). With the appropriate documents confirming their status, they may be exempt from income tax and the military levy or have different thresholds above which taxes must be paid.
