Tax Reporting of Notaries: Conditions for Maintaining Status for Budgetary Institutions
Individual tax consultation dated June 5, No. 3263/IPK/99-00-21-02-02 provided answers to systemic inquiries regarding the status of state notary offices as non-profit institutions and their role in reflecting information about inheritance. The State Tax Service confirmed that a notarial act is an act of certifying a right, not a financial operation involving income payment.
The first question of the consultation concerned whether state notary offices can be considered non-profit organizations according to Clause 133.4 of Article 133 of the Tax Code of Ukraine.
The State Tax Service confirmed that according to information systems, state notary offices are entered into the Register of Non-Profit Institutions and Organizations with the non-profit code 0031 (budgetary institutions).
Since state notary offices are created by the Ministry of Justice of Ukraine, are legal entities, and are fully funded from the state budget in accordance with Article 20 of the Law of Ukraine "On Notariat," they meet the criteria of budgetary institutions and may have the corresponding non-profit status.
Legal Consequences of the Status
State notary offices are not subject to profit tax provided the requirements for targeted use of income are met. All revenues in the form of own income of budgetary institutions must be directed exclusively to the maintenance of the office and the performance of its functions.
Any distribution of received funds among employees, except for salaries, or founders is a violation of non-profit conditions and may be grounds for exclusion from the Register of Non-Profit Institutions.
Thus, the State Tax Service confirmed the budgetary and non-profit status of state notary offices provided the established regime of fund usage is observed.
Inheritance vs Income Accrual
The second important issue of the consultation was clarification regarding the reflection of the value of inheritance in tax reporting (Appendix 4DF). The question was whether submitting this information is proof that the notary office accrues income to the heir.
According to Clause 174.3 of Article 174 of the Tax Code of Ukraine, the heirs themselves are responsible for paying inheritance tax. The notary in this procedure does not act as a taxpayer or tax agent.
The State Tax Service emphasizes that the certificate of inheritance rights is a procedural notarial act. It only confirms the transfer of ownership rights from the decedent to the heir, not creating independent income or payment from the notarial institution.
Since the transfer of property occurs within civil-law inheritance relations under Article 1216 of the Civil Code of Ukraine, the state notary office does not accrue or pay income. Accordingly, there is no object that could be considered a payment from the institution.
Important: the notary's obligation to transmit information to controlling authorities does not mean performing income accrual functions.
This approach removes the risks of mistakenly classifying state notary offices as tax agents in inheritance operations and confirms their purely procedural role in the inheritance registration process.
When Non-Profit Status Is at Risk
The consultation reminds about the conditions for remaining in the Register. In case of non-compliance with the requirements of Clause 133.4 of the Tax Code, for example, using funds for purposes not provided for by the budget or law, the organization is subject to exclusion from the Register.
The State Tax Service notes that during the period of martial law, transferring property or financing expenses for purposes unrelated to the main activity is not considered a violation if they are aimed at beneficiaries defined in Clause 63 of Subsection 4 of Section XX of the Tax Code, namely assistance to the Armed Forces of Ukraine, etc.
The main conclusion for notaries is that their function in the 4DF reporting is purely informational. By certifying the transfer of ownership rights in inheritance relations, the notary office is not a source of income for the heir but only records a legal fact for further tax control by the state regarding tax payments by individuals themselves.
Information about issued certificates of inheritance rights must be reflected according to Clause 174.4 of the Tax Code, but with a clear understanding that this does not create obligations for the office as a tax agent regarding income accrual.
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