Court upheld the tax authorities’ cassation appeal regarding additional accrual of 52.41 million UAH to the company

Press service of the State Tax Service of Ukraine, published 13 August 2021 at 16:33 Chapter: News

The Administrative Cassation Court within the Supreme Court confirmed legality of tax notifications-decisions issued by Main Directorate of the STS in Ivano-Frankivsk region for the total amount of 52.41 million UAH.

Court upheld position of Main Directorate of the STS in Ivano-Frankivsk region and concluded that according to Paragraph 187.1 Article 187 of the Tax Code of Ukraine in case of contribution of the real estate to authorized capital of another company, the occurrence date of VAT liability is the date of shipment of products, which consists in the transfer of right to dispose such property, particularly by drawing up a transfer act, not the state registration date of such property.

The panel of judges noted that provisions of Paragraph 187.1 Article 187 of the Tax Code of Ukraine do not make the occurrence date of VAT liability depending on the date of transfer of products ownership. Used the term “shipment of products” (Paragraph 187.1 Article 187 of the Tax Code of Ukraine) is understood not as a fact of products ownership but as a beginning of process of the physical movement of products from its supplier’s permanent location (storage) or other transfer of property executed in the manner prescribed by law.  

The Supreme Court summarized that application of provisions of the Civil Code of Ukraine and Law № 1952-IV by the courts of previous instances to the disputed legal relations in determining moment of occurrence of the real estate ownership transferred to its authorized capital is erroneous and which was made without taking into account provisions of Part 2 Article 1 of the Civil Code of Ukraine.

In addition, the Cassation Court took into account argumentations of Main Directorate of the STS in Ivano-Frankivsk region regarding stability of the Supreme Court’s position that the state registration of rights is not the basis for acquiring property rights, but only a state certificate of property rights, which makes it impossible to identify the fact of acquisition of property rights with the fact of its state registration. A similar conclusion is set out in Decision of the Grand Chamber of the Supreme Court as of 12.03.2019 in case № 911/3594/17 (proceedings № 12-234gs18), Decisions of the Supreme Court as of 27.02.2018 in case № 925/1121/17, as of 17.042019 in case № 916/675/15 and Decision of the Supreme Court as part of the joint chamber of the Commercial Cassation Court as of 24.01.2020 in case № 910/10987/18.

Therefore, Decision of the Administrative Cassation Court within the Supreme Court satisfied cassation appeal of Main Directorate of the STS in Ivano-Frankivsk region, cancelled Decision of the Courts of first and appellate instances to satisfy the claim, adopted a new Decision which completely denied claims of the JSC “Oriana” for recognition of tax notifications-decisions as illegal and its cancellation.

As follows, the Court confirmed legitimacy of tax notifications-decisions for 52.41 million UAH issued by Main Directorate of the STS in Ivano-Frankivsk region.

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