SUPPORT WITHOUT RESTRICTIONS: CHARITABLE DONATIONS ARE NOT SUBJECT TO VALUE ADDED TAX
According to sub-clause 197.1.15 of clause 197.1 of Article 197 of the Tax Code of Ukraine (the "TCU"), transactions related to charitable assistance, including free supply of goods/services to charitable organisations established and registered in accordance with the law, and provision of such assistance by charitable organisations to recipients (subjects) of charitable assistance in accordance with the law on charitable activities and charitable organisations, are exempt from VAT.
Free-of-charge supply shall mean the supply of goods/services to charitable organisations and recipients of charitable assistance without any monetary, material or other types of compensation. In case of non-compliance with the conditions set out in this sub-clause, such transactions shall be taxed on a general basis.
Goods received as charitable aid from domestic benefactors are subject to labelling rules. Labelling is carried out by applying the inscription "Charitable aid. Sale is prohibited" on the label, tag or directly on the outer or inner packaging of the goods. When labelling charitable aid goods, the symbols of the charitable organisation and the donor may be used.
Legal entities that receive charitable aid shall keep accounting and operational records of receipt, storage, distribution and use of charitable aid in the form of goods, works, services, as well as reports in the form established by the central executive body responsible for the formation of state policy in the field of statistics, which shall be submitted to the controlling authorities. Local executive authorities control the receipt, storage, and distribution of charitable donations, and local executive authorities and regulatory authorities control their intended use.
Marked goods received for the purpose of providing charitable assistance, which are supplied for money or other types of compensation, and/or the proceeds received for such supply, are subject to seizure from the unscrupulous seller and confiscation to the state in accordance with the established procedure.
Transactions involving the provision of charitable assistance in the form of excisable goods, securities, intangible assets and goods/services intended for use in economic activity are not subject to taxation.
Source: https://kyivobl.tax.gov.ua/media-ark/news-ark/757516.html
