Is the supply of goods and services free of charge for the transfer of goods (services) for defense needs of Ukraine, protection of public safety and interests of the state?

Forth clause of Paragraph 32 Note 1 Sub-section 2 Section XX of the Tax Code of Ukraine as of 02.12.2010 № 2755-VI (hereinafter – TCU) stipulates that is not a supply of goods and services free of charge (without any monetary, material or other compensation) transfer / provision of goods and services to the Armed Forces of Ukraine, National Guard of Ukraine, Security Service of Ukraine, Foreign Intelligence Service of Ukraine, State Border Guard Service of Ukraine, Ministry of Internal Affairs of Ukraine, State Emergency Service of Ukraine, Department of State Protection of Ukraine, State Service for Special Communications and Information Protection of Ukraine, voluntary formation of territorial communities, other formations established according to the laws of Ukraine, military formations, their associations, military units, subdivisions, institutions or organizations maintained at the state budget’s expense, for the defense needs of Ukraine, protection of public safety and interests of the state, as well as in favor of the central executive body that ensures formation and implementation of state policy in the civil protection sphere, civil defense forces and / or health care facilities of state and communal property and / or structural subdivisions on health care of region, Kyiv and Sevastopol city state administrations, unless such supply of goods and services are taxed at zero VAT rate.

Operations on the supply of goods for refueling of ground military transport or other special contingent of the Armed Forces of Ukraine and other institutions, determined by Resolution of the Cabinet of Ministers of Ukraine as of 02.0.2022 № 178 "Some issues of value added taxation at zero rate during legal regime of the martial law in Ukraine", are taxed at zero VAT rate.

At the same time transfer / provision of goods and services that, according to the Forth clause of Paragraph 32 Note 1 Sub-section 2 Section XX of the TCU, are not considered to be supplies of goods / services, persons carrying out such transfer / provision and persons receiving such goods / services must submit primary accounting documents according t the Law of Ukraine "On Accounting and Financial Reporting in Ukraine".

Norms of Paragraph 198.5 Article of the 198 TCU are not applicable to operations specified in this Paragraph.

More information is in the “Knowledge Base” of public information and reference resource