Order of the Ministry of Finance of Ukraine No. 265 of May 14, 2021 approved the Generalized tax consultation on the taxation of personal income received from the liquidation (termination) of a foreign legal entity or a foreign entity without the status of a legal entity. Below presented the main provisions of the consultation.
The documents define the procedure for personal income tax and military levy for income from liquidation (termination) of a foreign legal entity or foreign entity without the status of a legal entity received by an individual for the reporting periods until December 31, 2020 (inclusive), until December 31, 2021 (inclusive) and from January 1, 2022.
Income in cash and/or other assets received from the liquidation (termination) of such companies in the periods from January 1 to December 31, 2020 (inclusive) by the taxpayer – an individual who belongs to the category of persons specified in paragraphs 1 and 2 of item 14 of section 1 of chapter XX of the Tax Code of Ukraine (hereinafter – the Tax Code), is not included in the total monthly (annual) taxable income of such a payer of personal income tax (hereinafter – PIT) for 2020 reporting (tax) year. Such income is reflected in the Tax return on property and income for 2020 of an individual, otherwise it is not subject to PIT.
The specified income is subject to military levy, and the natural person – the recipient of such income is not exempted from accrual on the basis of the specified Tax return, withholding and payment (transfer) of the tax to the budget.
Such income received during 2021 is also exempt from PIT and is subject to military levy.
Income received during 2022 should be reflected in the Tax return on property and income for 2022 of an individual as not subject to PIT. Also, this income is exempt from the military levy on the basis of paragraph 1.7 of item 16 of section 10 of chapter XX of the Tax Code.
