Sale of a Car to a Legal Entity or Sole Proprietor: Who Pays Taxes and How the Amount is Determined
If an individual sells a vehicle to a legal entity or an individual entrepreneur, the buyer acts as the tax agent. They must withhold and remit personal income tax and military levy to the budget when these taxes are applicable. The amount of taxes depends on the type of vehicle and the number of sales during the calendar year.
The Car Buyer as Tax Agent
When an individual sells a vehicle to a legal entity or sole proprietor, the buyer is obliged to perform the functions of a tax agent.
They must withhold the relevant taxes—personal income tax (PIT) and military levy—from the seller’s income and remit them to the budget, as required by law.
The amount of tax liabilities depends on the type of vehicle sold and the sequential number of such sales by the individual during the calendar year.
Seller’s Obligation to Report Sales
To correctly determine the tax rate, the seller must provide information regarding the sequence of vehicle sales.
Such information should be stated in the purchase-sale agreement or submitted in a separate statement.
Based on this information, the tax agent determines whether the transaction is taxable and the amount of taxes to withhold.
Requirements of the Tax Code of Ukraine
According to paragraph 173.3 of Article 173 of the Tax Code of Ukraine, if a party to the purchase-sale agreement of movable property is a legal entity or a self-employed person, that person is considered the tax agent of the taxpayer.
In this case, the buyer is obliged to perform all the functions of the tax agent as defined in Section IV of the Tax Code of Ukraine.
The tax agent withholds taxes at rates established in accordance with paragraphs 173.1 or 173.2 of Article 173 of the Tax Code, taking into account information about the sequence of sales of movable property, which the seller indicates in the purchase-sale agreement or a separate statement.
Subscribe to our Telegram channel t.me/sudua, follow SUD.UA on Google News , and join us on VIBER, WhatsApp, Facebook and on Instagram to stay informed about the important events.
