Luxury tax 2024 in Ukraine
"Luxury tax" in Ukraine - is the unofficial name of two property taxes: tax on ownership of real estate other than a land plot (Article 266 of the TC) and transportation tax (Article 267 of the TC). "Luxury tax" refers to local taxes: its rates are set by local councils, and they also receive funds from taxpayers. Let's take a closer look at the cases when you have to pay this tax, who is exempt from it, when and how much you have to pay.
What falls under the luxury tax
To understand whether you need to pay the "luxury tax", it is worth understanding what real estate and what cars are subject to taxation.
Tax on real estate
For which real estate you will have to pay tax:
apartments over 60 m²;
houses over 120 m²;
an apartment and a house with a total area of 180 m² or more.
The tax is charged only on those meters that are not included in the preferential rate. For example, if the owner owns an apartment with an area of 90 square meters, he or she will have to pay for 30 m², as they exceed the preferential rate of 60 m². If, for example, the owner owns an apartment (119 m²) and a house (97 m²), then these figures must first be summed up, which means that the owner will have 216 m² of real estate. As a result, he will have to pay only for 36 m², since the preferential 180 m² is not paid.
Really large apartments and houses are worth mentioning separately. If the area of the apartment exceeds 300 m² and the area of the house exceeds 500 m², you will have to pay an additional UAH 25,000 for each property.
Transportation tax
You need to pay car tax only if the age of the vehicle does not exceed 2 years or 5 years depending on the model of the car. Tax payment also depends on the value of the car. Tax should be paid only if the average market price of a car in 2024 exceeds 375 minimum wages, i.e. UAH 2,663,000.
The list of taxable cars includes such models as BMW, Porsche, Tesla, Audi, Land Rover, Mercedes-Benz, Lexus and others. You can see the entire list of passenger cars for which you need to pay tax on the website of the Ministry of Economy of Ukraine.
The transportation tax rate does not depend neither on the year of manufacture of the car, nor on its real or average market value. It is fixed and amounts to UAH 25,000 for each vehicle in ownership.
Who has the right not to pay luxury tax
According to the current legislation, certain categories of citizens are exempt from paying "luxury tax". In what cases it is possible not to pay real estate tax:
If the real estate is located in a war zone or temporarily occupied territory;
if the apartment or house is destroyed/severely damaged as a result of war;
if the property owner has 3 or more children and has the status of a large family;
if the owner is a single mother/father who is raising orphans or children with disabilities;
if the owner has the status of an ATO participant;
if it is an educational institution or a religious organization.
All others will have to pay tax on immovable property. Pensioners are also not exempt from paying "luxury tax", unless they fall under other preferential categories.
When to pay luxury tax
The deadlines for paying property tax and transportation tax depend on whether the taxpayer is an individual or a legal entity. Thus, for individuals, the obligation to pay tax on housing or cars arises only upon receipt of a tax notification-decision (NUR) from the tax service. This notice is sent to the recipient by registered mail with return receipt requested to the taxpayer's tax address.
The IRS sends individuals an IRS notice of real estate tax payment by July 1 of the current year for the previous year. For example, if tax is due for 2023, the taxpayer must wait until July 1, 2024 to receive the notice. After receiving this notice, the individual has 60 days to pay the tax.
If the notice is not received by July 1, it may mean that the local council has not set the real estate tax. Some local authorities set real estate tax only for legal entities or increase the exemption rate by the square footage of the dwelling.
The situation with transportation tax is slightly different. The tax office also sends a notification to an individual before July 1, 2024, but the tax is paid for the year 2024, not for the previous year, as in the case of real estate. The car tax must also be paid within 60 days after receiving the notice. If the luxury tax is not paid on time, the taxpayer is assessed a debt.
Legal entities pay "luxury tax" according to a different principle. They calculate the tax independently, i.e. they do not receive any notices, and then pay this tax in advance installments every quarter by the 30th day of the month following the reporting quarter. The paid amounts of tax must be entered in the annual tax return.
How to calculate luxury tax
The real estate tax rate is calculated as a percentage of the minimum wage, which is set as of January 1 of the reporting year. This rate cannot be more than 1.5% per 1 m². If the tax is paid in 2024, it means that the reporting year is 2023 and should be guided by the minimum wage on January 1, 2023. At that time it amounted to 6700 UAH. Accordingly, the maximum rate cannot be more than UAH 100.5.
The size of the rate does not necessarily have to be 1.5%, it can be 1% or lower. The rate is set by the village, settlement or city council. If the property is located in a village in the Kiev region, you should be guided by the village council. You can find out the rate in your region on site of the State Tax Service of Ukraine.
To calculate the amount of tax, you need to subtract the preferential rate from the available housing area and multiply the remaining squares by the rate in your region. This will be the amount of tax payable: it must match the amount in the NRA. If we are talking about large real estate, it is important not to forget to add the fixed UAH 25,000.
It is not necessary to calculate the transportation tax, as it is fixed - 25 000 UAH. The only nuance - if the car is bought in the middle of the year, then the tax is paid only for those months when the car was already registered to the new owner.
