Next year the financial support mechanism for family farms will be launched. Let’s figure out who will get such support.
Regulatory background
Let us remind, that in May 2019 the regulation of the Cabinet of Ministers of Ukraine approved the Procedure for granting additional financial support to family farms through a co-payment mechanism in favor of insured persons – members/heads of family farms of a single contribution to mandatory state social insurance (hereinafter – Procedure.). The approval of this document was provided for by art. 13 of Law of Ukraine “On state support of agriculture in Ukraine” No. 1877-IV of June 24, 2004 (hereinafter – Law No. 1877). The Regulation will take effect and new financial support mechanism will be launched on January 1, 2020.
Right to support
The members of family-run farms or its head who are not legal entity are entitled to receive the financial support provided that such farm:
- was established in accordance with art. 8 of Law of Ukraine “On the farm” No. 973-IV of June 19, 2003 (hereinafter – Law No. 973);
- is registered as a single tax payer of forth group under chapter 1 section XIV TCU.
Special conditions
Let’s consider these conditions in detail. According to art. 8 of Law No.973 the family-run farm which is not a legal entity is set up by a physical entity alone or in association with family members under treaty (declaration) on establishment of family-run farm. The treaty is concluded by the physical entity and members of the family in writing. It is subject to notarization at the place of farm property and land plots location. The head of the family-run farm which is not a legal entity is the member of the family, stated in the treaty (declaration) who is registered as sole proprietor.
Standard form of treaty (declaration) on establishment of family-run farm was approved by order of the Ministry of Agrarian Policy and Food of Ukraine No. 177 of April 5, 2019.
Considering the registration of as the single tax payer of fourth group they can be according to i. 4 art. 491 of TCU the agricultural producers:
1) legal entities regardless of their organizational and legal form, where percentage of agricultural products during previous reporting (fiscal) years equals or exceeds 75%;
2) sole proprietors who operate solely within the farm registered according to Law No. 973 provided that the following conditions are met:
- they grow and fatten agricultural products, gathering, catching, processing of such grown or fattened products and their sale;
- they conduct business activities (except for shipping) at the registered address;
- they do not have employees;
- the members of the farm of such physical entity are exclusively members of the family as stipulated in part II of art. 3 of the Family Code of Ukraine;
- the area of agricultural land and/or land of the water fund owned and/or used by the members of the farm is not less than 2 hectares but not more than 20 hectares.
Therefore, the beneficiaries of the financial suppost can be members not of any farm, but only those that meet the criteria for registration as a single taxpayer, in particular regarding the area of agricultural land.
It should be noted that financial assistance is not provided to members (heads) of the family farm who are subject to insurance on other grounds or are exempt from payment of the unified social tax in accordance with part four of Art. 4 of Law of Ukraine “On Collection and Accounting of the Single Contribution to Mandatory State Social Insurance” No. 2464-VI of July 8, 2010 and do not voluntarily participate in the system of mandatory state social insurance.
