State Fiscal Service’ Attitude to Taxation of Residents’ Income from Real Estate Sale in Russian Federation and Facilities Import to Ukraine
State Fiscal Service in its letter as of September 15, 2015 № 8678/Г/99-99-17-03-03-14 explained that the taxation issues of incomes acquired by the residents of Ukraine from the sources in Russian Federation shall be regulated by the Intergovernmental Agreement between Ukraine and Russian Federation on avoidance of double taxation of incomes and properties, and on prevention of fiscal evasion.
In accordance with paragraph 1, article 13 of the Agreement the incomes earned by the residents from the sales of real estate, as being designated in article 6 of the Agreement, may be subject to taxation in this country.
Therefore, incomes gained by the resident of Ukraine from the sales of real estate located in Russia may be subject to taxation in Russia. The term «may» does not mean that the taxpayer has a right to choose in which country to pay taxes, this just means that the country where real estate is located has a right to impose taxes on the income in case such provisions exist in its internal legislation.
Moreover, in accordance with the Tax Code of Russian Federation the abovementioned incomes are subject to taxation in Russian Federation.
Paragraph 1, article 22 of the Agreement foresees that in case the resident of the contracting state earns an income or possesses real estate in other state which in accordance with the
Agreement provisions may be subject to taxation in the other state, the tax amount for this income or property paid in this state shall be subject to deduction of tax being imposed on such resident regarding the mentioned income or property in the first state. These deductions shall exceed the tax amount of the first state for such income or property imposed in accordance with its fiscal legislation and regulations.
In order to be eligible for tax and duties paid outside of Ukraine, the payer is obliged to receive from the authorized state fiscal service of the country where such income is obtained the certificate of tax and duty amount paid, and of taxable base and/or activities.
In other words, in accordance with the Agreement provisions, in case the resident receives an income in Russia which with regard to the Agreement is subject to taxation in
Russia, the tax amount for this income paid in Russia shall be deduced from the tax imposed on such resident regarding this income in Ukraine. With that, the deduced tax shall not exceed the tax amount charged in accordance with Ukrainian legislation.
The taxpayer gaining, in particular, foreign incomes is obliged to include the amount of such incomes into the total annual taxable revenues and should declare taxes as a result of the current fiscal year on the date provided by subparagraph 49.18.4, paragraph 49.18, article 49 of the Tax Code, as well as should pay taxes for such revenues.
If the resident gains any foreign income beyond the customs territory of Ukraine, the amount of such incomes should be included into the total annual taxable revenues of the taxpayer and shall charged at the rates designated in the article 167 of the Tax Code (15/20 %). Moreover, such resident should file avai;annual income tax before May 1 of the year following the current fiscal year taking into account the provisions of subparagraph 170.11.2, paragraph 170.11, article 170 of the Tax code and the Agreement.
Resident individual has a right to import to Ukraine and export from Ukraine the cash money in the amount exceeding the equivalent of 10 thousand euros given that written income tax has been filed to the fiscal service in the full extend and that the documents confirming cash withdrawal from bank (financial institutions) accounts are available exclusively for the amount which exceeds the equivalent of 10 thousand euros. The validity of such documents shall constitute 30 consecutive days from the date of issuance.
Cash import in the amount exceeding the equivalent of 10 thousand euros shall be carried upon availability of documents of optional form confirming cash withdrawal from the foreign bank (financial institutions) accounts. Herewith, it should be considered that the individual imports exactly the cash in the currency stated in bank documents (financial institutions). The validity period of import documents is not limited. The abovementioned documents are not subject to customs office submission. The ATM and payment terminal invoices, etc. are not considered to be the documents confirming the cash withdrawal from bank accounts (financial institutions). Current Ukrainian legislation does not foresee the payment of fees and other duties during cash import to the customs territory of Ukraine.
