Limited liability company (hereinafter − the Company) received reimbursable financial assistance from non-resident of Ukraine. How to complete the transaction, and what features of its taxation – in the following.
The procedure for receiving loans in foreign currency from non-residents approved by the Resolution of 17.06.2004, № 270 of NBU (hereinafter – the Resolution № 270). By the document is stipulated that residents (legal entities and private individuals − entrepreneurs, private individuals) can obtain loans, including reimbursable financial assistance in foreign currency from non-residents under contracts and in the manner, prescribed by the Resolution №270.
By paragraph 1.2 of the Resolution № 270 is provided that the Company should obtain a loan from non-residents through authorized banks that gave assent to service transactions under the contract. Functions of the servicing bank can perform both the bank by itself and subdivision (branch office) on behalf of the bank. If under the contract with non-resident is provided obtaining loans on the account of resident borrowing outside Ukraine and/or repayment is carried out from the account of resident opened outside Ukraine, resident − borrower should obtain an individual license for placement of currency values on accounts outside Ukraine.
Prior to obtaining money loan contract must be registered by the National Bank of Ukraine (para. 1.7 of the Resolution № 270). Registration procedure defined by Chapter 2 of the Resolution № 270).
In the event of non-registration of loan contract by the Decree of the President of Ukraine 'On settlement procedure for obtaining loans in foreign currency from non-residents and penalties for violations of currency legislation' of 27.06.1999, № 734/99 are provided penalties - 1% of received loan in the national currency of Ukraine at the official exchange rate of the National Bank of Ukraine (hereinafter − the NBU) on the date of the loan receiving, with subsequent compulsory registration of these contracts.
By paragraph 2.11 of the Resolution № 270 is also provided submission by borrower of statements on transactions under the contract monthly. The form and the procedure for filling the statements are identified by the Resolution of 01.03.2016, № 129 of NBU (Statements on obtaining and servicing a loan under the contract with non-resident, the form № 503 (monthly).
Taxation of transactions with obtaining interest-free loan (reimbursable financial assistance)
Corporate income tax
At its core, a loan obtaining (Art. 1046 of the Civil Code of Ukraine) does not lead to increase in shareholders' interests but increasing alternatively obligations. Thus, transactions of a loan obtaining (reimbursable financial assistance) do not affect the financial results of the Company.
By Chapter III of the Tax Code of Ukraine (hereinafter – the TCU) are not provided differences that affect the financial results upon transactions for obtaining and reimbursement of interest-free loan (reimbursable financial assistance), including to non-residents.
Value added tax
Transaction on lending by legal entities (lender)/receiving a loan from non-resident is out of definition of transaction on the supply of goods/services − value added tax on such transactions is not charged.
In particular, according to sub-para. 196.1.5 of the TCU transactions on obtaining and reimbursement of funds upon loan conracts are not the object to taxation.
A single tax
For payers of a single tax group 3 the amount of financial assistance provided on reimbursement basis, received and reimbursed within 12 calendar months from the date of receiving , is not the object to taxation (sub-para. 3 para. 292.11 of TCU).
