- Due diligence costs for the purchase of real estate
- Costs associated with a contract for purchase of real estate and registering title
- Tax or duty on the acquisition of shares in a company owning real estate
- Capital gain taxation on future disposal of real estate or shares in a company owning real estate
jurisdiction
1. Due diligence costs for the purchase of real estate
1.1 Municipal search
Cost
Map/zoning plan: free of charge.
VAT
N/A
1.2 Utility search (each service)
Cost
Negotiable
VAT
N/A
1.3 Land registry search (per search)
VAT
N/A
1.4 Company search, per company
VAT
N/A
1.5 Survey/Valuation fee, approx
VAT
Included
1.6 Phase 1 Environmental survey
VAT
Included
2. Costs associated with a contract for purchase of real estate and registering title
2.1 VAT on price
Cost
Transfer duty is not applicable; however, the purchase of real estate is the subject of 1% Pension Fund Fee (except for land plots). The fee shall be paid by the purchaser and its basis of accrual is the price of real estate as mentioned in the sale and purchase contract. There is also 1% state duty (notary fee) paid either by the seller or the purchaser.
A non-resident company directly acquiring real estate in Ukraine shall register with the tax authorities of Ukraine prior to such purchase.
VAT
20%
2.2 Transfer duty
3. Tax or duty on the acquisition of shares in a company owning real estate
No transfer duty, transfer tax or stamp duty is applicable. 1% state duty (notary fees) of sale price, if sale agreement is notarised (notarisation, however, is not mandatory).
A non-resident company acquiring shares in a Ukrainian company from another non-resident, that does not have a permanent establishment in Ukraine, shall also (in certain cases) register with the tax authorities of Ukraine in order to report, withhold and pay (if applicable) any withholding tax due on capital gains realised by the non-resident seller from such transaction. Such obligation arises once the real estate located in Ukraine amounts to 50 percent or more of the Ukrainian company’s assets. The same rule applies to the purchase of the shares in a foreign company – once it owns the shares in the abovementioned Ukrainian company and such shares amount to 50 percent or more of the foreign company’s assets.
4. Capital gain taxation on future disposal of real estate or shares in a company owning real estate
4.1 Tax on capital gains on the disposal of the real estate itself
Sale of real estate by a Ukrainian resident company: For corporate profits tax purposes (18%) taxable profit (capital gain) from sale of real estate by Ukrainian resident company shall be calculated in accordance with accounting rules, subject to specific increasing and decreasing tax differences according to the Tax Code of Ukraine. VAT (20%) is paid on purchase price or book (residual) value of buildings (premises), if the latter is higher. It is paid by a seller (if it is registered as VAT-payer) but financed by a purchaser. Sale of the land plots is exempted from VAT, except for land plot purchased together with, and comprising a value of, real estate located thereon.
Sale of residential premises at the secondary market is exempt from VAT, while first supply is subject to VAT, unless construction was performed at state’s cost.
Sale of real estate by a non-resident company: an income is subject to 15% Ukrainian withholding tax, unless the applicable double tax treaty provides otherwise.
Sale by a Ukrainian resident individual: sale proceeds rather than capital gain is subject to 5% personal income tax as well as 1,5% of military levy, unless proceeds are obtained from the sale of residential property owned for at least three years and providing this is the only sale of real estate in the calendar year;
Sale by a non-resident individual: sale proceeds are subject to personal income tax at 18% and 1,5% of military levy.
4.2 Tax on capital gains on the disposal of shares in a company owning real estate
For the purposes of corporate profits tax taxable profit (investment gain) from sale of shares by a Ukrainian resident company shall be calculated in accordance with accounting rules, subject to decreasing and increasing tax differences. Corporate profits tax rate is 18%.
Capital gain from sale of shares by a non-resident company is subject to 15% Ukrainian withholding tax, unless the applicable double tax treaty provides otherwise. Ukrainian withholding tax of 15% also applies on capital gains realised from sale of foreign company (i.e. indirect sale), provided that the following two conditions are met: (i) foreign company owns the shares in the Ukrainian company and such Ukrainian shares amount to 50 percent or more of the foreign company’s assets; and (ii) the respective Ukrainian company owns real estate located in Ukraine and such real estate amounts to 50 percent or more of the Ukrainian company’s assets.
Sale of shares is not subject to Ukrainian VAT.
A gain of Ukrainian and non-resident individual (if the source of the gain has its origin in Ukraine) of sale of shares is subject to personal income tax at 18% and 1,5% of military levy.
