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Publication date: 29.05.2024
lawyer, 23 years of experience in enforcement.
Does a public organization have to register as a VAT payer?
The main goals of charitable activities are to provide assistance and solve the legitimate problems of beneficiaries in the areas defined by Law No. 5073, as well as to promote the development and support of these sectors for the betterment of society. This definition is set out in the initial part of Article 3 of the Law of Ukraine "On Charitable Activities and Charitable Organizations" dated 07.05.2012 No. 5073 (hereinafter - Law No. 5073).
A beneficiary, which specifically concerns a territorial community, is a recipient of charitable assistance from one or more benefactors. This assistance is provided to help the beneficiary achieve the goals set forth in Law No. 5073.
Charitable activities consist in the involvement of charitable organizations that comply with the norms defined by Law No. 5073, as well as individuals who make contributions to these organizations and those who use their services (according to the first part of Article 4 of Law No. 5073).
According to Law No. 5073, Article 6 defines the possibility for a donor to transfer assets, including funds, property, and property rights, to beneficiaries without any costs in order to achieve specific charitable goals, as provided for in Law No. 5073.
Acts are carried out by local self-government bodies authorized by them in accordance with the provisions of the first part of Article 169, Art. 172 Art. 173 of Art. 327 of the Civil Code of Ukraine and Art. 60 of the Law of Ukraine "On Local Self-Government in Ukraine". These acts are performed on behalf of and for the benefit of the territorial community.
According to Article 3 of Law No. 5073, the activities of local self-government bodies can be carried out within certain spheres. Subject to compliance with all necessary requirements defined by special legislation, LGUs have the opportunity to receive charitable aid, including humanitarian aid, which can then be distributed among needy beneficiaries.
The norms of Clause 1.1 of Article 1 of the Tax Code of Ukraine (hereinafter referred to as the Tax Code of Ukraine) regulate relations arising in the field of tax and fee collection.
The requirements for the registration of a natural person as a value added tax payer, which include both mandatory and voluntary registration, are set out in Article 181 and Article 182 of the Code of Civil Procedure.
If the total amount of operations for the provision of taxable goods or services, including operations carried out through local or global computer networks (for example, by installing special applications on smartphones, tablets or other digital devices), exceeds UAH 1,000,000 (excluding VAT ). ) during the last 12 calendar months, an individual or legal entity must register as a taxpayer in the relevant supervisory body at the place of residence in accordance with the requirements specified in Article 183 of the Civil Code. However, this requirement does not apply to individuals classified as single tax payers of the first-third groups, as specified in clause 181.1 of the Code of Civil Procedure.
When registering as a VAT payer, the total volume of operations for the supply of goods/services includes operations taxed at various VAT rates (20%, 0%, 7%, 14%), as well as those exempt from VAT.
During the period of martial law in Ukraine, the activities of non-governmental organizations (NGOs) and charitable organizations are exempted from the calculation of the total amount of mandatory VAT registration, defined in paragraph 197.1.15 of the Code of Civil Procedure, 181 of the Code of Criminal Procedure (namely, paragraph 69.12, paragraph 69, part 10 Ch. XX of the Civil Code).
Taking into account the above information, if a public organization is created and registered in accordance with the law, it is not obliged to register as a VAT payer if the value of the goods or services provided exceeds UAH 1 million.
In addition, in accordance with paragraph 197.1.15 of the Code of Civil Procedure, transactions for the provision of charitable assistance, including the free supply of goods/services to charitable organizations registered in the prescribed manner, as well as the provision of such assistance by charitable organizations to purchasers, are exempt from VAT taxation in accordance with the legislation that regulates the activities of charitable organizations.
The concept of free supply refers to the provision of goods and services to charities and those in need without any form of compensation, whether monetary, material or otherwise.
It is important to note that if the conditions set forth in clauses 197.1.15 of the Civil Code are not met, such transactions are subject to taxation according to standard rules.
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