An individual has entered property-apartment in share capital of a company. Is this the subject to the personal income tax (hereinafter – PIT) and to the war taxunder such conditions?
It should be recalled that the sale of a private individual apartment in the second and each subsequent time in a year is taxed at the rate of 5% of the tax rate (para. 172.1 of the Tax Code of Ukraine, hereinafter − TCU) and the war tax at a rate of 1.5%. In addition, for this purpose, the sale is considered to be any transfer of ownership of property (other than inheritance and donation) that is, among other things, entering into share capital. The latter has long been confirmed by the explanation of the State Fiscal Service of Ukraine (hereinafter − SFSU) and does not raise doubts.
However, the entering of the property in share capital by the individual is also regulated by para. 165.1.44 of TCU, according to which the amount of the property/non-monetary entering to the statutory fund of a legal entity − the issuer of corporate rights in exchange for such rights is not the subject to the taxation of personal income tax.
Which norm should be preferred? Taking into account the presumption of the lawfulness of the decisions of the payer in the event that the rules of the law involve ambiguous interpretation, in this case should be applied para. 165.1.44 of TCU. This means that the transaction of entering an apartment in share capital is not the subject to the PIT as well as the war tax. Since this provision does not focus on real estate, such an exemption is possible, in particular, when entering into share capital of vehicles or corporate rights of another legal entity. This conclusion is true even if the apartment was owned by an individual less than three years. The tax authorities also fully agree with this approach (the SFSU letter dated 17.08.2017, No. 1646/ В/99-99-13-02-03-14/ІПК).
This conclusion is valid regardless of the number of apartments sold during the year. Thus, if an individual has already sold the dwelling, and then decided to make another one to share capital, the transaction for such an application should not be taxed by the PIT as well as the war tax.
At the same time, if this year the individual has entered one apartment in share capital of a legal entity, and then sells another one, this sale should be taxed by the PIT and the war tax (in fact it will be considered as the second sale). Therefore, in this case, it is advisable to interchange the positions of the transactions (first, the sale of an apartment, and then the entering of another apartment in share capital), or to postpone the sale of the apartment for the next year.
