Received compensation through court: is it necessary to report these funds in the declaration
Transfer of funds to a person by court decision as compensation for material or moral damage does not exempt them from the obligation to report such payments in the declaration. Regardless of whether it concerns compensation for property damage, moral damage, or harm caused to life or health, the amounts received are considered income for financial declaration purposes.
"Judicial and Legal Newspaper" analyzed in which cases such funds are considered income for financial declaration purposes and based on which legislative norms the corresponding obligation arises.
Is it necessary to declare compensation received by court decision
The answer is yes.
Funds received as compensation for material or non-material (moral) damage are income for financial declaration purposes.
Such income includes, in particular:
- amounts directed by court decision to compensate for material damage caused to a person;
- funds paid as compensation for harm caused to life or health;
- compensation for moral damage in the amount determined by the court decision.
Which norms provide for this
The obligation to declare such payments is provided by:
- paragraph 7 of part one of article 46 of the Law of Ukraine "On Prevention of Corruption";
- subparagraph "a" of subparagraph 164.2.14 of paragraph 164.2 of article 164 of the Tax Code of Ukraine;
- paragraph 120 of appendix 2 "Directory of signs of individual income" to the Procedure for filling out and submitting by tax agents the Tax calculation of income amounts accrued (paid) in favor of individual taxpayers and amounts of tax withheld from them, as well as amounts of the single contribution accrued, approved by the order of the Ministry of Finance of Ukraine dated January 13, 2015 No. 4.
Thus, regardless of the fact that the funds are paid as compensation for damage caused, for financial declaration purposes they are considered income and must be reflected in the declaration in accordance with legislative requirements.
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