A legal entity - a single tax payer of the third group wants to provide financial assistance to an employee in connection with the difficult financial situation of the family after the attacks of the Russian Federation. Can the simplified system of taxation be applied when providing irrevocable financial assistance to such an individual?
Forms of financial assistance
According to item 14.1.257 of the Tax Code of Ukraine (hereinafter - the Tax Code) financial assistance is funds provided on a non-repayable or repayable basis.
In particular, repayable financial assistance is the amount of funds received by the taxpayer for use under the contract, which does not provide for the charging of interest or the provision of other types of compensation in the form of a fee for the use of such funds, and is required to be returned.
Restrictions on the provision of financial assistance
Item 291.5 of the Tax Code defines the types of activities under the conditions of which legal entities cannot be payers of the single tax of the third group.
Thus, business entities that carry out activities in the field of financial intermediation, except for activities in the field of insurance, which are carried out by insurance agents, defined by Law of Ukraine No. 1909-IX of November 18, 202 "On Insurance", surveyors, emergency commissioners and adjusters specified in Sec. III of the Tax Code (paragraph 6 of item 291.5.1 of the Tax Code) cannot be payers of the single tax of the third group.
According to the National Classifier of Ukraine DK 009:2010 "Classification of types of economic activity", approved by Order of the State Consumer Standard of Ukraine No. 457 of October 11, 2010, the provision of financial assistance belongs to code 64 "Providing financial services other than insurance and pension provision". Therefore, the taxpayer with code 64 "Provision of financial services other than insurance and pension provision" cannot apply the simplified taxation system.
Taking into account the above, the provision of financial assistance (repayable or non-repayable) to an individual is not an activity in the field of financial mediation, and therefore does not contradict the requirements of paragraph 6 of subitem 291.5.1 item 291.5 of the Tax Code.
At the same time, the activity of the legal entity - the payer of the single tax of the third group for the provision of non-repayable and repayable financial assistance on an ongoing basis can be considered as the provision of financial services.
