Taxation of Property Transfer on Gratuitous Basis under Loan Agreement: What about VAT?

• Free transfer of property under a loan agreement is subject to VAT taxation.
• The loan agreement is concluded from the moment of transfer of money or other property.
• According to the Tax Code of Ukraine, VAT is applicable to operations involving the free transfer of property under a loan agreement.
• The tax base for such operations is determined based on the contractual value, taking into account general taxes and fees.
• The tax base cannot be lower than the purchase price of the goods/services.
• Certain exceptions apply to regulated goods/services, gas for household use, and electricity traded on the electricity market.
• The contractual value includes any amounts of money, material and non-material assets transferred as compensation for goods/services.
• Penalties, interest, and damages are not included in the contractual value.
• Therefore, free transfer of property under a loan agreement is subject to VAT taxation.

Source: news.dtkt.ua

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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