Military Tax on Inheritance and Gifts: Who Has to Pay 5%
Receiving inheritance or a gift may involve not only paperwork but also tax obligations. Depending on the degree of kinship and the recipient's status, such income may be subject to personal income tax and military tax. At the same time, the law provides a preferential tax regime for close relatives.
According to the Tax Code, the military tax is levied at a rate of 5% of the taxable object's value.
At the same time, gifts from individuals are taxed under the same rules as inheritance.
The person who received the inheritance is responsible for paying personal income tax. If the inherited property is taxable, its value must be reported in the annual declaration of property status and income.
However, the declaration does not need to be submitted if:
- the inheritance or gift is not taxable;
- the income is taxed at a zero rate;
- the tax was paid during the notarial registration of the inheritance or gift agreement.
If the taxpayer is required to submit a declaration for other reasons, income from inheritance or gifts must also be indicated in it.
Who pays the military tax
The military tax of 5% is paid by:
- heirs or gifted persons who are not members of the first and second degree family;
- heirs or gifted non-resident persons who receive inheritance or gifts from a resident of Ukraine.
Who is exempt from payment
The military tax is not paid on the value of inheritance or gifts received by family members of the first and second degrees of kinship, as such income is taxed at a zero personal income tax rate.
Family members of the first and second degrees of kinship include, in particular:
- parents;
- husband or wife;
- children;
- full brothers and sisters;
- grandmother and grandfather;
- grandchildren.
Where to pay the military tax
If the heir or gifted person is a resident of Ukraine and pays the military tax before the issuance of the certificate of inheritance rights or the gift agreement, the funds are transferred at the place of notarial registration of the respective documents, explained the tax service.
Thus, if the inheritance or gift is received by close relatives, the military tax is not paid. In other cases, as well as for non-residents, a military tax rate of 5% applies.
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