Information note For non-residents who provide electronic services to individuals

Legal Entities Taxation Department, published 31 October 2022 at 11:06 Chapter: User notes

Procedure for mandatory registration as the VAT payer of a non-resident who provides electronic services to individuals, when provision place is located on the customs territory of Ukraine

 

Paragraph 2 of final and transitional provisions of the Law № 1525 stipulates that changes regarding registration as the VAT payer of a non-resident, who provides electronic services to individuals, when provision place is located on the customs territory of Ukraine, are applied to tax periods starting from January 1, 2022.

Non-resident is obliged to register as the VAT payer if previous year amount of operations on the provision of electronic services to individuals, when provision place is located on the customs territory of Ukraine, has reached an equivalent of 1,000,000 UAH (hereinafter – the maximum amount of operations).^[1].

This amount is calculated at the official exchange rate of Ukraine to foreign currency, set by the National Bank of Ukraine, effective at 00.00 on January 1 of the corresponding year.

Application for mandatory registration as the VAT payer of a non-resident, who in 2021 reached the indicated maximum amount of operations, should have been submitted by the non-resident until March 31, 2022 inclusively (until March 31, inclusively of the relevant calendar year following year in which such non-resident has reached the indicated maximum amount of operations).

Date when the non-resident is considered registered as the VAT payer in case of mandatory registration as the VAT payer

In case of mandatory registration as the VAT payer of a non-resident who provides electronic services to individuals, when provision place is located on the customs territory of Ukraine, the non-resident is considered registered as the VAT payer from the date of entry in the VAT register. Entry in Register of taxpayers is made within three working days after receiving application for registration as a taxpayer by the tax authority.^[2].

 

Example 1. Non-resident submitted application for mandatory registration as the VAT payer through a special portal solution for non-resident users who provide electronic services. Tax authority received such application, for example, on January 3, 2022. Entry into Register of taxpayers was made on January 5, 2022. In this case, non-resident is considered registered as the VAT payer from January 5, 2022.

Example 2. Non-resident submitted application for mandatory registration as the VAT payer through a special portal solution for non-resident users who provide electronic services. Tax authority received such application, for example, on April 14, 2022. Entry into Register of taxpayers was made on April 28, 2022. In this case, non-resident is considered registered as the VAT payer from April 28, 2022.

 

Date when the non-resident is considered registered as the VAT payer in case of voluntary registration as the VAT payer

In case of voluntary registration as the VAT payer a non-resident who provides electronic services to individuals, when provision place is located on the customs territory of Ukraine, such non-resident is considered registered as the VAT payer from the first day of reporting (tax) period (quarter) following expiration of 10 calendar days after submission to tax authorities of application on registration as the VAT payer^[3].

Example 1. Non-resident submitted application for voluntary registration as the VAT payer on January 3, 2022. Entry into Register of taxpayers was made on January 3, 2022. Non-resident is considered registered as the VAT payer since April 1, 2022 (from the first day of reporting (tax) period (quarter) following expiration of 10 calendar days after submission to tax authorities of application on registration as the VAT payer).

Example 2. Non-resident submitted application for voluntary registration as the VAT payer on March 28, 2022. Entry into Register of taxpayers was made on March 30, 2022. Non-resident is considered registered as the VAT payer since July 1, 2022 (from the first day of reporting (tax) period (quarter) following expiration of 10 calendar days after submission to tax authorities of application on registration as the VAT payer).

According to the Law № 2118-ІХ – deadlines are suspended. Therefore, taxpayers have a right to apply and register as a taxpayer after March 31, 2022. At the same time, such taxpayers are released from liabilities provided by the Code.

 

First reporting period for submission of simplified tax declaration and tax payment by non-resident registered as the VAT payer.

To determine the first reporting period, the general rule indicated in Sub-paragraph "a" of Paragraph 202.1 Article 202 Section V of the Code is used, according to which if non-resident registers as a taxpayer from the day other than the first day of a calendar period, the first reporting (tax) period is a period starting from the date of such registration and ending on the last day of the first full reporting period.

Example 1. Non-resident submitted application for mandatory registration as the VAT payer. Tax authority received such application, for example, on January 3, 2022.  Entry in Register of taxpayers was made on January 5, 2022. Non-resident is considered to be registered as a taxpayer from January 5, 2022. In this case, the first reporting (tax) period is a period starting from the date of such registration (January 5, 2022) and ending on the last day of the first full reporting period (June 30, 2022).

Example 2. Non-resident submitted application for voluntary registration as the VAT payer on February 28, 2022. Entry in Register of taxpayers was made on March 2, 2022. Non-resident is considered to be registered as a taxpayer from April 1, 2022 (from the first day of reporting (tax) period (quarter) following expiration of 10 calendar days after submission to the tax authorities of application on registration as the VAT payer). In this case, the first reporting (tax) period will be the second quarter of 2022 (period starting from April 1, 2022 and ending on June 30, 2022).

Deadline for submission of tax declaration is within 40 calendar days following the last calendar day of reporting (tax) period, in this case – not later than August 9, 2022.

Deadline for payment of tax liabilities accrued in such tax declaration is within 30 calendar days following the last day of a deadline for submission of tax declaration, i.e., in this case – not later than September 8, 2022.

Currently it is technically possible to submit the simplified tax declaration only from July 1, 2022.

Operations that have been carried out since the registration date of such non-resident as the VAT payer are subject to payment to the budget and reflection in tax declaration.

For example, registration date of non-resident is January 5, 2022. Operations on provision of electronic services, provided from January 5, 2022 and paid for in the period from January 5, 2022 to June 30, 2022 inclusively, should be reflected in tax declaration.

For example, registration date of non-resident is April 28, 2022. Operations on provision of electronic services, provided from April 28, 2022 and paid for from April 28, 2022 to June 30, 2022 inclusively, should be reflected in tax declaration.

At the same time we hope that you will be able to pay tax to the State budget of Ukraine.  Such tax will be considered as overpayment and after submission from July 1, 2022 the simplified tax declaration will be credited as paid tax liabilities.

 

Procedure for payment of tax liability by non-resident registered as the VAT payer.

Non-resident pays amount of tax liability in foreign currency (Euro or US dollar) to a foreign currency account.

Information on foreign currency account requisites is available in the tab "Status of settlements with the budget" of the Non-resident – VAT payer Cabinet of a special portal solution from the date of entry in Register of the VAT payers.

Non-resident pays the VAT liabilities in foreign currency specified in application for registration as a taxpayer (Euro or US dollar).

While paying the VAT liabilities, we kindly ask you to indicate the individual tax number of non-resident – VAT payer assigned by the State Tax Service of Ukraine in line 72 "Sender to receiver information" of the settlement document.

Information on individual tax number is available to non-resident – VAT payer in the Non-resident – VAT payer Cabinet of a special portal solution when non-resident receives notification on registration as the VAT payer.