The State Fiscal Service released an individual tax ruling by publishing it in the Unified register of tax rulings. According to the ruling: any funds received by a permanent establishment (PE) from its head-office (including financing of the PE’s expenses and salaries) should be treated as a payment for services supplied by such PE in favour of the head-office; the supply of such services is subject to VAT; such PE has to register as a VAT payer if the total value of the services supplied during the preceding 12 months exceeded UAH 1 mln.

In our view, such approach is not in line with the effective legislation and creates the risk of VAT being charged on the financing of PEs if the total amount of such financing for the preceding 12 months exceeds UAH 1 mln.

We will continue to monitor the developments and keep you updated on the issue.

In case you have any questions, please contact us via contacts stated in this letter.

* Individual tax ruling № 2323/6/99-99-15-03-02-15/ІПК dated 20 October 2017
Contacts:

Camiel van der Meij, Partner & TLS Leader, camiel.van.der.meij@ua.pwc.com
Dmytro Donets, Partner at Attorney’s Association “PwC Legal”, dmytro.donets@ua.pwc.com
Denis Shendryk, Senior Manager, Tax and Legal Services, denis.shendryk@ua.pwc.com
Inna Andrushchenko, Manager, Tax and Legal Services, inna.andrushchenko@ua.pwc.com
75 Zhylyanska Street | Kyiv | Tel:  +380 44 354 0404 | Fax: +380 44 354 0790 | pwc.ukraine@ua.pwc.com |  www.pwc.com/ua 

This flash report is produced by PricewaterhouseCoopers’ tax and legal services department. The material contained in this alert is provided for general information purposes only and does not contain a comprehensive analysis of each item described. Before taking (or not taking) any action, readers should seek professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this alert.
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