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Taxation of Warranty Repair Services: VAT Implications

  • The provision of warranty repair services does not create a VAT taxable object for VAT payers.
  • According to the Tax Code of Ukraine, VAT is levied on the supply of goods/services by taxpayers whose place of supply is located on the customs territory of Ukraine.
  • Supply of goods includes any transfer of the right to dispose of goods, including sale, exchange, or donation, as well as supply of goods by court decision.
  • The procedure for warranty repair or replacement of complex household goods is approved by Cabinet of Ministers of Ukraine Resolution No. 506.
  • In case of defects or falsification of the goods during the warranty period, the consumer has the right to demand free defect rectification from the seller or manufacturer.
  • Warranty repair involves performing work to eliminate defects in the product to ensure its proper use during the warranty period.
  • The elimination of defects is done by replacing or repairing the component parts and performing regulatory work according to the requirements of regulatory documents.
  • Therefore, when a taxpayer receives goods for warranty repair and subsequently returns them to the owner after such repair, there is no supply of goods.
  • Consequently, there is no VAT liability for the taxpayer for the return or transfer of goods to the owner after warranty repair.
  • However, the provision of warranty repair services by a taxpayer is subject to VAT. The taxable base for such services is determined based on the value of the services paid by the manufacturer of the goods for which warranty repair was carried out.


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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