War-Damaged Real Estate Exempted from Taxation: the Law

On 02.05.2023, the President of Ukraine signed the Law of Ukraine “On Amendments to the Tax Code of Ukraine Regarding Exemption from the Tax on Real Estate Other than Land for Destroyed or Damaged Real Estate” under draft law No. 7632 (the “Law”) that had been earlier adopted by the Parliament.

The Law provides that real estate objects (excluding land plots, for which similar exemptions had been imposed earlier) will be exempted from property and land taxes should such real estate be destroyed / damaged because of Russian armed agression and be not in use.

The fact of damage to real estate must be confirmed by a statement executed by the authorities. Such statements are, in practice, usually executed by commissions formed by local self-government bodies and/or military administrations; however, you may also apply to the State Emergency Service’s bodies. A taxpayer must file the tax authorities with a mentioned statement and a corresponding application.

While applying for an inspection, a taxpayer must usually provide:

  1. his/her personal documents (copies of a passport and a taxpayer’s account card),
  2. evidence of rights to the real estate object (extract from the state register, a copy of an agreement, etc.), and
  3. a respective application.

The tax exemption will be effective from the month in which the real estate was damaged until the beginning of its use after repair or reconstruction. As for real estate objects that are only partially used due to damage, a proportional reduction of the corresponding tax obligations will apply. After the repair and the start of use of the damaged real estate, a taxpayer must inform the State Tax Service thereon; in this case, a corresponding tax obligation will be restored.

Thus, tax reliefs on a specific real estate object will depend on its features (damages, usage) and will apply regardless of whether the territory on which it is located is classified as a zone of hostilities or a temporarily occupied one.
If a taxpayer does not begin to use the destroyed buildings after three years from the date of termination / cancellation of the martial law in Ukraine, further extension of the tax reliefs provided by the Law will be possible but will require an annual inspection of the relevant real estate by the authorities.

Let us please remind you: earlier, similar tax reliefs were introduced for land plots located in combat zone and on temporarily occupied territories. Currently, the legislator has expanded such support to other types of real estate as well.

The Law has come into force from 06.05.2023.