To the attention of licensees who carry out fuel wholesale

Press service of the State Tax Service of Ukraine, published 15 December 2023 at 15:10 Chapter: News

Licensees holding fuel wholesale licenses in the absence of fuel wholesale locations and conducting fuel wholesale from fuel storage locations or fuel wholesale locations that are used by other licensees should consider the following.

Principles of state policy on regulation of fuel turnover, which are defined in the Law of Ukraine № 481/95-VR as of 19.12.1995 "On state regulation of production and turnover of ethyl alcohol, alcohol distillates, alcoholic beverages, tobacco products, liquids used in electronic cigarettes and fuel" (hereinafter – Law № 481) provide that license (special permit) is a document certifying the business entity’s right (including foreign business entity operating through its registered permanent representative office) to conduct one of types of activities specified in the Law  № 481 within a specified period.

Activities that are subject to licensing include:

fuel wholesale – activities related to the purchase and further sale of fuel with or without a change in its physical and chemical characteristics by the business entity (including foreign business entities operating through their registered permanent representative offices) of retail and/or wholesale and /or other persons.

fuel storage – activity of storing fuel (own or obtained from other persons) with or without changing its physical and chemical characteristics.

According to definitions (Article 1 of the Law №. 481), places of activity include:

place of fuel wholesale –place (territory) where facilities and/or equipment and/or containers used for wholesale and/or storage of fuel are located on the ownership right or use;

fuel storage place – place (territory) where structures and/or equipment and/or containers used for fuel storage are located on the ownership right or use.

To obtain license to: 

fuel wholesale, in the absence of places of wholesale fuel trade, the business entity submits application for obtaining the specified license and document confirming payment of the annual levy for license;

retail or wholesale of fuel or for a right to store liquefied petroleum gas, together with application and document confirming payment of the annual levy for license, the applicant additionally submit certified copies of the following documents:

documents confirming the ownership right or right to use a land plot, or other legally prescribed land use right to a land plot on which object of retail or wholesale of fuel or fuel storage is located, valid on the date of submission of application and/or on the date of entering such object into operation, of any purpose;

act of the object’s commissioning or act of readiness of the object for operation, or certificate of acceptance into operation of objects completed by construction, or other documents confirming acceptance of objects into operation according to legislation, for all objects in a place of retail or wholesale of fuel or fuel storage, necessary for the retail or wholesale of fuel or fuel storage;

permission to carry out work of increased danger and operation (use) of machines, mechanisms, equipment of increased danger.

Law № 481 provides for the right to carry out fuel storage activities upon obtaining a corresponding license indicating location of such storage.

Business entity has the right to store fuel without obtaining license for the fuel storage in places of fuel production or places of retail or wholesale of fuel for which relevant licenses have been obtained (Article 15 of the Law № 481).

At the same time, provisions of the Law № 481 do not contain direct prohibitions or restrictions to the taxpayer to enter into contracts for responsible fuel storage. As stated in Article 174 of the Economic Code of Ukraine, economic obligations may arise, in particular, from the business contract and other agreements provided for by the law, as well as from agreements not provided for by the law, but such that do not contradict it.

Sub-paragraph 14.1.32 Paragraph 14.1 Article 14 of the Tax Code of Ukraine stipulates that responsible storage is economic operation carried out by the taxpayer and involves transfer, according to storage contracts, of tangible assets for safekeeping to another individual or legal entity without the right to use them in the economic turnover of such individual, with subsequent return of such tangible assets to the taxpayer without changing their qualitative or quantitative characteristics.

According to provisions of the Civil Code of Ukraine, parties are free to enter into contract, choose a counterparty and determine contract terms, taking into account requirements of this Code, other acts of civil legislation, customs of business turnover, requirements of reasonableness and fairness (Part 1 of Article 627 Chapter 52), accordingly, the product sale can be carried out by concluding appropriate contracts, for the product sale directly by the business entity or with involvement of third parties, the most common of which in the fuel sale are sales contracts, deliveries, commissions, mandates, while under the storage contract one party (the custodian) undertakes to keep the thing transferred to by the other party (the bailor) and to return it to the bailor in safekeeping (Article 936 Chapter 66 of the Civil Code of Ukraine).

Taking into account above specified, on the basis of license for the wholesale of fuel without places of fuel wholesale places, such business entity – licensee can:

transfer fuel for storage to any other business entity (third parties) provided that such individuals have fuel storage license or wholesale license with a place of fuel wholesale, and, in turn, such business entities are licensees and have the right to store fuel that does not belong to them;  

carry out activities that involve sale of such fuel from the fuel storage place of other business entities / place of fuel wholesale of other business entities, for which license for fuel storage or license for wholesale with the fuel wholesale place has been issued and is valid, respectively.