A Notary Will Not Register an Inheritance or Gift Without Payment of 23% Tax: Who the Rule Applies To
Foreigners who receive inheritance or gifts of property from Ukrainian citizens must take into account special taxation rules. Before registering an inheritance or a gift agreement, it is necessary not only to pay the relevant taxes but also to provide documentary confirmation of such payment. Otherwise, the notary will not be able to issue a certificate of inheritance rights or certify the gift agreement.
Gift to a Non-Resident Is Taxed According to Inheritance Rules
According to paragraph 174.6 of Article 174 of the Tax Code of Ukraine, a gift in the form of property received by a non-resident from a resident of Ukraine is taxed under the same rules as inheritance.
What Taxes a Non-Resident Pays When Receiving Inheritance or a Gift
The tax authorities have emphasized that if the heir is a non-resident and the testator or donor is a resident of Ukraine, any object of inheritance or gift is subject to:
- personal income tax at a rate of 18%;
- military tax at a rate of 5%.
The obligation to pay personal income tax and military tax lies entirely with the heir or the gifted non-resident.
When Taxes Must Be Paid
The State Tax Service noted that a non-resident must pay personal income tax and military tax before the notarial registration of the inheritance or gift agreement.
If registration is carried out in a rural area, the taxes must be paid before the documents are processed by an authorized official of the local self-government body.
The tax authorities also stressed that, without a document confirming full payment of personal income tax and military tax, the notary or the official of the village council will not issue a certificate of inheritance rights or register the gift agreement.
Where to Pay Personal Income Tax and Military Tax
Personal income tax and military tax are paid at the place of notarial registration of the inheritance or gift agreement.
For payment of personal income tax, budget classification code 11010501 is used — “Personal income tax paid by individuals who are not subject to mandatory declaration.”
For payment of military tax, budget classification code 11011000 is applied — “Military tax.”
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