Taxation of charitable and humanitarian assistance in Ukraine

1. Law of Ukraine “On Charitable Activity and Charitable Organizations”
2. Law of Ukraine “On Humanitarian Aid”
3. Tax Code of Ukraine

The Law of Ukraine “On Charitable Activity and Charitable Organizations” provides the following definitions: 

“charitable activity – voluntary personal and/or property assistance for achieving the goals defined by this Law, which does not provide for the philanthropist receiving profit, or payment of any remuneration or compensation to the philanthropist on behalf or under the instruction of the beneficiary”

clause 2 of part 1 of Article 1 of the relevant Law

”beneficiary – a recipient of charitable assistance (an individual, a non-profit organization, or a territorial community) that receives assistance from one or more philanthropists for achieving the goals defined by this Law”

clause 1 of part 1 of Article 1 of the relevant Law

The Law of Ukraine “On Humanitarian Aid” provides the following definitions:

“humanitarian aid – targeted earmarked free assistance in cash or in kind, in the form of irrevocable financial assistance or voluntary donations, or assistance in the form of performance of works or provision of services, provided by foreign and domestic donors for humanitarian motives to recipients of humanitarian aid in Ukraine or abroad who need it due to social vulnerability, material insecurity, a difficult financial situation, the occurrence of an emergency, in particular as a result of natural disasters, accidents, epidemics and epizootics, environmental, technogenic and other disasters that create a threat to the life and health of the population, or a serious illness of specific individuals, as well as for preparation for the armed defense of the state and its defense in the event of armed aggression or armed conflict. Humanitarian aid is a type of charity and must be directed in accordance with the circumstances, objective needs, the consent of its recipients, and subject to compliance with the requirements of Article 3 of the Law of Ukraine “On Charitable Activity and Charitable Organizations””

paragraph 2 of Article 1 of the relevant Law

“recipients of humanitarian aid – individuals and legal entities that need it and to whom it is provided directly. Recipients of humanitarian aid with the status of a legal entity are determined in accordance with points “a”, “b”, “v”, “h”, “g” of the fifth paragraph of this Article”

paragraph 6 of Article 1 of the relevant Law

However, despite a certain difference between charitable and humanitarian assistance, and despite separate legislative regulation of these two concepts, tax legislation does not distinguish between them.

Thus, in the context of taxation, humanitarian assistance is part of charitable assistance. This follows from the rules of the Tax Code of Ukraine, which state that:

“Is not taxed and is not included in the taxpayer’s total monthly or annual taxable income charitable, including humanitarian, assistance (hereinafter – charitable assistance) that is received for their benefit in the form of funds or property (work performed free of charge, a service provided) and that meets the requirements defined by this clause.”

subparagraph 170.7.1 of paragraph 170.7 of Article 170 of the Code

Pursuant to the rules of the Tax Code of Ukraine (TCU), charitable assistance is divided into targeted and non-targeted.

Targeted charitable assistance is assistance provided under defined conditions and directions of its spending.

Non-targeted assistance is considered assistance provided without establishing such conditions or directions

subparagraph 170.7.1 of paragraph 170.7 of Article 170 of the Code

Targeted or non-targeted charitable assistance provided to a taxpayer who suffered as a result of the following is not included in taxable income:

a) environmental, technogenic and other disasters in localities declared, pursuant to the Constitution of Ukraine, zones of an extraordinary environmental situation — within the limit amounts determined by the Cabinet of Ministers of Ukraine;

b) a natural disaster, accidents, epidemics and epizootics of nationwide or local character that caused damage or create a threat to citizens’ health or the natural environment, caused or may cause human casualties or loss of citizens’ property, in connection with which a decision to engage (provide) charitable assistance was adopted by the Cabinet of Ministers of Ukraine or a local self-government body, respectively, within the limit amounts determined by the Cabinet of Ministers of Ukraine or the local self-government body, respectively;

c) armed aggression of the russian federation during the period of the legal regime of martial law or a state of emergency;

The procedure for confirming the status of persons who suffered as a result of the armed aggression of the russian federation against Ukraine during the period of the legal regime of martial law or a state of emergency, for the purpose of not including in the taxable income of individuals — taxpayers income received as targeted or non-targeted charitable assistance, is determined by the Cabinet of Ministers of Ukraine.

subparagraph 170.7.2 of paragraph 170.7 of Article 170 of the Code

However, such a procedure still does not exist. Yet there is clause 26 of the Transitional Provisions of the TCU, which states the following: 

“Temporarily, starting from the date of introduction of martial law in Ukraine introduced by Decree of the President of Ukraine “On the Introduction of Martial Law in Ukraine” of 24 February 2022 No. 64/2022, approved by the Law of Ukraine “On Approval of the Decree of the President of Ukraine “On the Introduction of Martial Law in Ukraine”” of 24 February 2022 No. 2102-IX, until its termination or cancellation, the provisions of subpoint “c” of subparagraph 170.7.2 of paragraph 170.2 of Article 170 of this Code apply with the following peculiarity: until the Cabinet of Ministers of Ukraine adopts the procedure for confirming the status of persons who suffered as a result of the armed aggression of the Russian Federation against Ukraine during the period of the legal regime of martial law or a state of emergency, for the purpose of not including in the taxable income of individuals — taxpayers income received as targeted or non-targeted charitable assistance, the status of such persons is determined independently by the providers of targeted or non-targeted charitable assistance”. 

Similar conclusions are stated in the notice of the Main Directorate of the STS in Kyiv Region and in the notice of the Main Directorate of the STS in Volyn Region.

The amount of non-targeted charitable assistance, including material assistance, provided by residents — legal entities or individuals — for the benefit of a taxpayer during a reporting tax year is not included in taxable income in aggregate up to the income threshold determined under the first paragraph of subparagraph 169.4.1 of paragraph 169.4 of Article 169 of this Code, as established as of 1 January of such year.

Where non-targeted charitable assistance is received from a philanthropist — an individual or a legal entity — the taxpayer must file an annual tax return stating its amount if the total non-targeted charitable assistance received during the reporting tax year exceeds the threshold established by the first paragraph of subparagraph 169.4.1 of paragraph 169.4 of Article 169 of this Code.

subparagraph 170.7.3 of paragraph 170.7 of Article 170 of the Code

This non-targeted assistance threshold must be calculated using the formula:

1 subsistence minimum for an able-bodied person × a coefficient of 1.4, rounded to the nearest 10 hryvnias

as of 2023 the threshold is: 2684 × 1.4 = 3 757.6 ≈ 3 760 hryvnias

Targeted charitable assistance provided by residents — legal entities or individuals — in any amount (value) is not included in taxable income when provided to:

a) a healthcare institution to compensate the cost of paid treatment services for the taxpayer or a first-degree family member, a person with a disability, a child with a disability or a child at least one of whose parents is a person with a disability; an orphan or a half-orphan; a child from a large or low-income family; a child whose parents have been deprived of parental rights, including for the purchase of medicines (donor components, prosthetic and orthopedic products, medical devices for individual use by persons with disabilities) in amounts not covered by payments from the mandatory state social medical insurance fund, except for expenses on cosmetic treatment or cosmetic surgery (including cosmetic prosthetics not related to medical indications), hydrotherapy and heliotherapy not related to chronic diseases, dental treatment and prosthetics using precious metals, electroforming and porcelain, abortions (except abortions performed for medical indications, or if the pregnancy resulted from rape), gender reassignment surgery; treatment of venereal diseases (except AIDS and venereal diseases caused by non-sexual infection or rape), treatment of tobacco or alcohol addiction; purchase of medicines, medical devices and appliances not included in the list of essential items approved by the Cabinet of Ministers of Ukraine;

prosthetic and orthopedic enterprises and rehabilitation institutions to compensate the cost of paid rehabilitation services, technical and other rehabilitation aids provided to a taxpayer recognized in the established manner as a person with a disability, or to their child with a disability, in amounts not covered by payments from budgets and the mandatory state social medical insurance fund;

b) a baby home, children’s home, boarding house, boarding school (including a special, sanatorium or orphan boarding school), family-type children’s home, foster family, social rehabilitation school, shelter for minors; a juvenile reception and distribution center of a National Police of Ukraine body — for distribution of charitable assistance among persons under eighteen years of age staying in these institutions;

c) a state or municipal institution or a charitable organization, including the Red Cross Society of Ukraine, that provide services to homeless persons involving meals and overnight accommodation;

d) a penitentiary institution to improve conditions of detention, meals or medical care of persons held in pre-trial detention centers or places of imprisonment, or directly to such persons;

e) a boarding house for elderly citizens and persons with disabilities and their departments, a boarding house for war and labor veterans, a geriatric boarding house — to improve their conditions of detention, meals, medical care and social rehabilitation; a rehabilitation center, a territorial social service center (provision of social services), registration centers and social protection institutions for homeless persons, social adaptation centers for persons released from places of imprisonment, sanatoriums for veterans and persons with disabilities maintained from the state and local budgets — for distribution of charitable assistance among persons staying in such institutions;

f) a taxpayer conducting scientific research or development, to reimburse the cost of equipment, materials and other expenses (except salary payments, fringe benefits and other expenses for personal needs), provided that the results of such research or development are published and cannot be the subject of patenting or other restrictions on publication or free dissemination of intellectual (industrial) property objects obtained as a result of such research or development, and provided that receipt of such assistance will not be a precondition for any contractual obligations between the philanthropist or a third party and the recipient of charitable assistance in the future, except duties of targeted use of such charitable assistance;

g) an amateur sports organization or club to compensate expenses for purchase or rental of sports equipment and inventory, use of sports grounds, premises or facilities for training, ensuring an amateur athlete’s participation in sports competitions, and purchase of sports uniforms and meals during such competitions.

h) an educational institution in the form of tuition fees or additional educational services for a person with a disability, a child with a disability or a child at least one of whose parents is a person with a disability; an orphan or a half-orphan; a child from a large or low-income family; a child whose parents have been deprived of parental rights;

i) a taxpayer recognized in the established manner as a person with a disability, or the legal representative of a child with a disability, for fulfillment of the state’s obligations under the legislation of Ukraine to provide technical and other rehabilitation aids, medical devices, and a car at the expense of budget funds (subject to removal of the person with a disability or child with a disability from the waiting list for such aids, devices or car at the expense of budget funds). Categories of persons with disabilities and children with disabilities, and the list of technical and other rehabilitation aids, medical devices and car makes referred to in this subparagraph, are approved by legislation.

Charitable assistance received by family-type children’s homes or foster families is exempt from taxation if its amount (value) does not exceed three hundred thousand hryvnias during the reporting tax year while the state guardianship agreement is in force.

A recipient of targeted charitable assistance in the form of funds is entitled to use it within the period set by the terms of such assistance, but for no more than 12 calendar months following the month of receipt of such assistance, except assistance provided for treatment, the right to use which is no more than 24 calendar months following the month of receipt of such assistance, except receipt of charitable assistance in the form of an endowment. If targeted charitable assistance in the form of funds is not used by its recipient within such period and is not returned to the philanthropist before its end, such recipient must include the unused amount of such assistance in total annual taxable income and pay the relevant tax.

subparagraphs 170.7.4 and 170.7.5 of paragraph 170.7 of Article 170 of the Code

A recipient of targeted charitable assistance may apply to the controlling authority with a submission to extend the period for using such targeted charitable assistance, stating circumstances showing that full use within the periods specified by this clause is impossible, and the head (deputy or authorized person) of such controlling authority may decide on such extension. If the controlling authority refuses such extension, its decision may be appealed in the manner established for appealing a controlling authority’s decision under this Code.

subparagraph 170.7.6 of paragraph 170.7 of Article 170 of the Code

It is prohibited to provide charitable assistance to state authorities and local self-government bodies or to non-profit organizations created by them, or to third parties on their instruction, if provision of such charitable assistance is a prior or subsequent condition for issuing to the taxpayer any permit, license or approval, providing a state service, or adopting another decision in their favor, or for accelerating such issuance, provision or adoption (simplifying the procedure).

subparagraph 170.7.7 of paragraph 170.7 of Article 170 of the Code

1. – other cases provided for by the TCU

– combatants — servicemen (reservists, persons liable for military service) and employees of the Armed Forces of Ukraine, the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the State Border Guard Service of Ukraine, rank-and-file and commanding officers, servicemen and employees of the Ministry of Internal Affairs of Ukraine, the State Guard Administration of Ukraine, the State Service of Special Communications and Information Protection of Ukraine, other military formations established under the laws of Ukraine, police officers and employees of the National Police of Ukraine who defend (defended) the independence, sovereignty and territorial integrity of Ukraine, take (took) a direct part in the anti-terrorist operation, ensuring its conduct while being directly in the areas of the anti-terrorist operation, in implementing measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures; employees of enterprises, institutions and organizations who are (were) engaged and take (took) a direct part in the anti-terrorist operation in the areas of its conduct, in ensuring implementation of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures, in the manner established by law, or for the benefit of family members of such combatants who, during participation in the anti-terrorist operation, participation in ensuring its conduct, or implementation of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures, sustained wounds, contusions or other health injuries, were killed, died as a result of wounds, contusions or mutilation received during participation in the anti-terrorist operation, ensuring its conduct, or implementation of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures, or were declared missing in the established manner;

– individuals entered in the Register of volunteers of the anti-terrorist operation and/or of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in the manner defined by the Law of Ukraine “On Charitable Activity and Charitable Organizations” (hereinafter — the Volunteers Register), for providing charitable assistance for the benefit of persons defined in subpoints “a” and “c” of this subparagraph (directly to such persons or through the Ministry of Defense of Ukraine, the Main Directorate of the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the Administration of the State Border Guard Service of Ukraine, the Ministry of Internal Affairs of Ukraine, the National Police of Ukraine, the State Guard Administration of Ukraine, the Administration of the State Service of Special Communications and Information Protection of Ukraine, through governing bodies of other military formations established under the laws of Ukraine, their formations, military units, subdivisions, institutions or organizations maintained from the state budget), in the amount actually used for such purposes, and for reimbursement of documented expenses of such philanthropists related to providing the said charitable assistance;

For the purchase of, or in the form of, special personal protective equipment (helmets, body armor manufactured to military standards), technical surveillance equipment, medicinal products, personal hygiene products, foodstuffs, items of kit supply or other goods (works, services) according to the list determined by the Cabinet of Ministers of Ukraine, or for payment (compensation) of the cost of medicinal products, donor components, medical devices, technical and other rehabilitation aids, paid treatment services, provision of medical devices, technical and other rehabilitation aids, medical rehabilitation services, and spa treatment.

 – participants in mass public protest actions in Ukraine who sustained wounds, contusions or other health injuries while taking part in these actions in the period from 21 November 2013 to 28 February 2014, as well as on 2 May 2014 in the city of Odesa, or for the benefit of family members of such participants who were killed or died as a result of wounds, contusions or other health injuries received in that period or were declared missing in the established manner;

– individuals who live (lived) in the territory of settlements where an anti-terrorist operation is (was) conducted, and/or who were forced to leave their place of residence in connection with the conduct of the anti-terrorist operation in such settlements;

– individuals who lived in the territory of the Autonomous Republic of Crimea and were forced to leave their place of residence in connection with the temporary occupation of the territory of Ukraine defined by the Law of Ukraine “On Ensuring the Rights and Freedoms of Citizens and the Legal Regime on the Temporarily Occupied Territory of Ukraine”;

– employees of enterprises, institutions, organizations and civil protection forces who are (were) engaged and take (took) a direct part in implementing measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation while being directly in areas of hostilities and during the period of hostilities, in the manner established by law, or for the benefit of their family members;

– individuals who live (lived) in the territory of settlements where hostilities are (were) conducted, and/or who were forced to leave their place of residence in connection with the conduct of hostilities in such settlements.

 For assistance for treatment and medical care (examination, diagnosis), including for payment (compensation) of the cost of medicinal products, donor components, medical devices, technical and other rehabilitation aids, paid treatment services, provision of medical devices, technical and other rehabilitation aids, medical rehabilitation services, and spa treatment;

In an amount that in aggregate during the reporting (tax) year does not exceed 500 times the minimum wage established by law as of 1 January of the reporting (tax) year, for restoration of lost property, for housing, social and household needs and for other needs according to the list determined by the Cabinet of Ministers of Ukraine, that arose for:

• combatants — servicemen (reservists, persons liable for military service) and employees of the Armed Forces of Ukraine, the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the State Border Guard Service of Ukraine, rank-and-file and commanding officers, servicemen and employees of the Ministry of Internal Affairs of Ukraine, the State Guard Administration of Ukraine, the State Service of Special Communications and Information Protection of Ukraine, other military formations established under the laws of Ukraine, police officers and employees of the National Police of Ukraine who defend (defended) the independence, sovereignty and territorial integrity of Ukraine, take (took) a direct part in the anti-terrorist operation, ensuring its conduct while being directly in the areas of the anti-terrorist operation, in implementing measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures; employees of enterprises, institutions and organizations who are (were) engaged and take (took) a direct part in the anti-terrorist operation in the areas of its conduct, in ensuring implementation of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures, in the manner established by law, or for the benefit of family members of such combatants who, during participation in the anti-terrorist operation, participation in ensuring its conduct, or implementation of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures, sustained wounds, contusions or other health injuries, were killed, died as a result of wounds, contusions or mutilation received during participation in the anti-terrorist operation, ensuring its conduct, or implementation of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in Donetsk and Luhansk regions while being directly in the areas and during the period of such measures, or were declared missing in the established manner;

• participants in mass public protest actions in Ukraine who sustained wounds, contusions or other health injuries while taking part in these actions in the period from 21 November 2013 to 28 February 2014, as well as on 2 May 2014 in the city of Odesa, or for the benefit of family members of such participants who were killed or died as a result of wounds, contusions or other health injuries received in that period or were declared missing in the established manner;

• individuals who live (lived) in the territory of settlements where an anti-terrorist operation is (was) conducted, and/or who were forced to leave their place of residence in connection with the conduct of the anti-terrorist operation in such settlements;

• individuals who lived in the territory of the Autonomous Republic of Crimea and were forced to leave their place of residence in connection with the temporary occupation of the territory of Ukraine defined by the Law of Ukraine “On Ensuring the Rights and Freedoms of Citizens and the Legal Regime on the Temporarily Occupied Territory of Ukraine”;

• individuals entered in the Register of volunteers of the anti-terrorist operation and/or of measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation in the manner defined by the Law of Ukraine “On Charitable Activity and Charitable Organizations” (hereinafter — the Volunteers Register), for providing charitable assistance for the benefit of persons defined in subpoints “a” and “c” of this subparagraph (directly to such persons or through the Ministry of Defense of Ukraine, the Main Directorate of the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the Administration of the State Border Guard Service of Ukraine, the Ministry of Internal Affairs of Ukraine, the National Police of Ukraine, the State Guard Administration of Ukraine, the Administration of the State Service of Special Communications and Information Protection of Ukraine, through governing bodies of other military formations established under the laws of Ukraine, their formations, military units, subdivisions, institutions or organizations maintained from the state budget), in the amount actually used for such purposes, and for reimbursement of documented expenses of such philanthropists related to providing the said charitable assistance;

• combatants — servicemen (reservists, persons liable for military service) and employees of the Armed Forces of Ukraine, the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the State Border Guard Service of Ukraine, rank-and-file and commanding officers, servicemen and employees of the Ministry of Internal Affairs of Ukraine, the State Guard Administration of Ukraine, the State Service of Special Communications and Information Protection of Ukraine, other military formations established under the laws of Ukraine, volunteer formations of territorial communities, police officers and employees of the National Police of Ukraine, including those who sustained wounds, contusions or other health injuries, were killed, or died as a result of wounds, contusions or mutilation, who defend (defended) the independence, sovereignty and territorial integrity of Ukraine, take (took) a direct part in repelling armed aggression and ensuring national security, eliminating the threat to Ukraine’s state independence and territorial integrity during martial law or a state of emergency in Ukraine while being directly in the areas where such measures are implemented, or for the benefit of family members of such combatants;

• employees of enterprises, institutions, organizations and civil protection forces who are (were) engaged and take (took) a direct part in implementing measures to ensure national security and defense, repel and deter the armed aggression of the Russian Federation while being directly in areas of hostilities and during the period of hostilities, in the manner established by law, or for the benefit of their family members;

• individuals who live (lived) in the territory of settlements where hostilities are (were) conducted, and/or who were forced to leave their place of residence in connection with the conduct of hostilities in such settlements.

If the total amount of charitable assistance received during the reporting (tax) year exceeds the said threshold, the excess over such amount is taxed at a rate of 18%, and the taxpayer must file an annual tax return stating the amounts of charitable assistance.

As of 2023 the relevant threshold is: 

500 * 6 700 = 3 350 000 hryvnias

subparagraph 170.7.8 of paragraph 170.7 of Article 170 of the Code