The State Tax Service Clarified the Issue of VAT Exemption

The Main Department of the State Tax Service in the Kyiv region has clarified the conditions for VAT exemption when a supply contract was concluded between a taxpayer and their counterparty during an exemption period, as stipulated by paragraph 64 of subsection 2 of section 20 of the Tax Code of Ukraine. For the exemption to apply, the actual delivery of goods must have occurred after the exemption regime ended, and a conclusion from the Chamber of Commerce and Industry, confirming the goods' classification according to the UKT ZED, must verify compliance with the relevant code.

Paragraph 187.1 of article 187 of section V of the Tax Code of Ukraine defines the date of occurrence of tax liabilities for the supply of goods/services as the earlier of the following events:

a) The date funds are credited from the buyer/customer to the taxpayer's account (bank/non-bank payment service provider) as payment for goods/services. For electronic money payments, this is the date electronic money is credited to the taxpayer's electronic wallet. For cash payments, it is the date cash is received in the taxpayer's cash register, or if absent, the date of cash collection at the banking institution servicing the taxpayer.

b) The date goods are shipped. For exported goods, it is the date of the customs declaration confirming the crossing of Ukraine's customs border, issued in accordance with customs legislation. For services, it is the date the taxpayer issues the document confirming the supply of services.

For electronically prepared documents, the date of issuance of the document confirming the supply of services

is the date indicated within the document itself as its preparation date, in accordance with the Law of Ukraine dated 16 July 1999 No. 996-XIV "On Accounting and Financial Reporting in Ukraine" (with amendments and additions), regardless of the date the electronic signature was applied.

According to paragraph 64 of subsection 2 of section XX of the Tax Code of Ukraine, until 1 January 2026, operations involving the import into Ukraine's customs territory and supply within Ukraine's customs territory of vehicles equipped exclusively with electric engines (one or more) were temporarily exempt from VAT. This applies to vehicles classified under commodity subheading 8701 24 (specifically tractor units for road semi-trailers), and commodity subcategories 8703 80 10 10, 8703 80 90 10, 8704 60 00 00 according to UKT ZED (including those produced in Ukraine).

Therefore, if the actual supply of goods and payment for them occurred after the termination date of the VAT exemption regime established by paragraph 64 of subsection 2 of section XX of the Tax Code of Ukraine, then from that date, the aforementioned VAT exemption regime no longer applies to operations involving the supply of such goods within Ukraine's customs territory. Such operations are subject to VAT taxation, regardless of when the supply contract for these goods was concluded.

VAT liabilities for these taxable transactions must be determined in accordance with paragraph 187.1 of article 187 of section V of the Tax Code of Ukraine, applying the "first event" rule.

The VAT exemption regime established by paragraph 64 of subsection 2 of section XX of the Tax Code of Ukraine applied until its termination date, provided the conditions specified in that paragraph of the Tax Code were met.

The norms of the mentioned paragraph of the Tax Code did not directly stipulate the condition of obtaining a conclusion from the Chamber of Commerce and Industry regarding the classification of goods for the purpose of applying the VAT exemption regime established by paragraph 64 of subsection 2 of section XX of the Tax Code.

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