Court supported the controlling body’s position regarding payment of rent for land

Press service of the State Tax Service of Ukraine, published 09 January 2024 at 10:20 Chapter: News

Cassation court supported the controlling body’s position regarding obligation of plaintiff – business entity to pay rent for land, since he, as the real estate owner is payer of land tax in the sense of tax legislation.

Supreme Court stated that condition for non-payment of land tax under the specified taxation system is that the business entity, which is the owner or user of land plot, uses this land for economic activities. Exemption possibility from payment of this tax under other conditions, for example, when a building, its part or a non-residential premises without the land plot on which the listed real estate is located, is separately leased, has not been established.

Supreme Court also concluded that legal relationship between ownership of land plot or its use and obligation to pay land tax does not cease in case that the owner or user of land plot acquires the business entity’s status and chooses type of economic activity and taxation system that are not provide for the use of land in economic activities. That is, with acquisition of features (quality) of the business entity, individual who has become one does not cease to be the owner or user of land plot and is not released from the obligation to pay land tax.

The court stated that in case of leasing buildings, structures or their parts under the lease agreement, simultaneously with right to lease a building or other capital structure (separate part thereof), the lessee is granted right to use land plot on which they are located, as well as adjacent to buildings or structures, that is, the lessors’ economic activity is carried out necessarily at the expense of leasing property and land plot, and the plaintiff has not proven the fact of using land plot on which the two-story non-residential building is located for economic activity.

Cassation administrative court as a part of the Supreme Court on 26.12.2023 in case № 826/10917/16 dismissed cassation appeal of individual-entrepreneur. Ruling of the Kyiv appeal administrative court as of 16.01.2018 was left unchanged.