Changes in taxation related to volunteer activities have been introduced

Law of Ukraine 15.08.2022 № 2520-ХХ as of "On amendments to the Tax Code of Ukraine regarding promotion of development of volunteer activities and activities of the non-profit institutions and organizations in conditions of armed aggression of the Russian Federation against Ukraine" (entered into force on 03.09.2022) amended the Tax Code of Ukraine (hereinafter - Code).

1. Exemption from taxation of funds collected by an individual on personal current account for payment of charitable assistance in favor of taxpayers specified in Sub-paragraph “c” of Sub-paragraph 165.1.54 Paragraph 165.1 Article 165 of the Code has been settled.

Specified funds are not included in the total monthly (annual) taxable income of the taxpayer, provided that during registration of an individual in Register of volunteers of the anti-terrorist operation and/or implementation of measures to ensure national security and defense, repel and deter armed aggression of the Russian Federation, the specified account is designated as an account with purpose of carrying out charitable activities (except for accounts that were closed before 21.11.2013).

Changes: in Sub-paragraph “b” of Sub-paragraph 165.1.54 Paragraph 165.1 Article 165 of the Code, words "in subparagraph "a"" were replaced by the words "in subparagraphs "a" and "c"";

2. The following are not included in the total monthly (annual) taxable income of an individual:

- funds or cost of property (services) provided to an individual-volunteer, with whom contract has been concluded on the implementation of volunteer activities, in part of expenses of a non-profit organization that involves volunteers in activities, for conducting medical examination and vaccination of the volunteer, other medical and preventive activities directly related to the provision of volunteer assistance by such individual according to the Law of Ukraine "On volunteer activities";

- reimbursement by a non-profit organization to an individual-volunteer with whom contract on the implementation of volunteer activities has been concluded, documented expenses related to the provision of volunteer assistance, in the amount and according to the list provided for in Article 11 of the Law of Ukraine "On volunteer activities ".

Changes: Paragraph 165.1 Article 165 of the Code was amended by Sub-paragraphs 165.1.64 and 165.1.65;

– for the 2022 and 2023 tax (reporting) years, income in the form of sums of funds or free goods (services) provided at the expense of budget funds of foreign countries and their state funds to the taxpayer and members of his / her family of the first degree of kinship as individuals who suffered as a result of armed aggression of the Russian Federation against Ukraine and used right for temporary protection according to legislation of such foreign state.

Changes: Sub-section 1 of Section XX "Transitional Provisions" of the Code was amended with Paragraph 27.

3. Before adoption by the Cabinet of Ministers of Ukraine of procedure for confirming status of individuals who suffered as a result of armed aggression of the Russian Federation against Ukraine during the martial law, state of emergency with aim of not including in the taxable income of individuals-taxpayers incomes received in the form of targeted or of non-targeted charitable assistance, status of such individuals is determined independently by the providers of targeted or non-targeted charitable assistance.

4. Individuals-entrepreneurs, except for individuals who have chosen the simplified taxation system, for the basic reporting (tax) period, which is equal to the calendar year, submit tax declaration as the income tax payer by May 1 of the year following the reporting year, except for cases provided for in Section IV of the Code.