To the attention of single tax payers of Group IV (legal entities)!

Regarding the inclusion of Group IV of agricultural land plots, lease contracts of which were  submitted for registration to the single taxation object but due to the martial law, state registration of the corresponding lease right has not been carried out.

Taxation object for the single tax payers of Group IV is an area of agricultural land (arable land, hayfields, pastures and perennial crops) and/or water fund land (inland water bodies, lakes, ponds, reservoirs) owned by or granted to an agricultural producer for use, including on lease terms.

Agricultural commodity producers, in order to make a transition to the simplified taxation system or to annually confirm the the single tax payer’s status of Group IV, submit general tax declaration for the current year not later than February 20 of the current year for the entire area of land plots that are subject to the single taxation; tax declarations for the current year separately for each land plot; calculation of the share of agricultural production and information (certificate) about the availability of land plots.

Information (certificate) on the availability of land plots must contain data on each document establishing the ownership right and/or use of land plots, including each lease agreement for a plot of land (share) and data on the state registration of such right.

Contractual relations regarding the lease of land plots are regulated by the Civil and Land Codes of Ukraine, Law of Ukraine № 161-XIV as of 06.10.1998 "On land lease" (hereinafter – Law № 161-XIV).

Subjects of land relations are citizens, legal entities, local self-government bodies and state authorities (Paragraph 2 Article 2 of the Land Code of Ukraine).

Articles 125 and 126 of the Land Code of Ukraine stipulate that the ownership right of a land plot, as well as right of permanent use and right to lease a land plot, arise from the moment of state registration of these rights. The ownership right and use of a land plot is established according to the Law of Ukraine № 1952-IV as of 01.07.2004 "On state registration of real property rights and encumbrances".

Right to lease a land plot is subject to the state registration according to the law and arises from the moment of state registration of such right.

Along with that, the Law of Ukraine № 2145-IX as of 24.03.2022 "On amendments to certain legislative acts of Ukraine on creating conditions for ensuring food security during the martial law" entered into force on April 7, 2022, which provides for significant changes to the procedure for land leases and registration of relevant contracts during the martial law.

Innovations stipulate that state registration of land lease contracts during the martial law is entrusted to district military administrations (without the need to make changes to the State Register of Real Property Rights).

Tax legislation does not clearly define an obligation to include in the taxation object for the single tax payers of Group IV only area of agricultural land (arable land, hayfields, pastures and perennial plantations) and/or land of the water fund (inland reservoirs, lakes, ponds, reservoirs), for which the lease agreements are registered according to the procedure established by current legislation.

At the same time, Articles 6, 19 and 25 of the Law № 161-XIV stipulate that lessee of the land plot is obliged to start using the land plot within terms established by the land lease agreement, but not before the state registration of a corresponding lease right, therefore the single tax payers of Group IV are not released from an obligation to carry out state registration of concluded land lease contracts.