In its Letter No.7222/6/15-3415-26 of 24 April 2012, the State Tax Service (STSU) has clarified the procedure for determining place of supply for services under Paragraph 186.3 of the Tax Code of Ukraine. Among these services are:

► intellectual property rights licensing services
► advertising, advisory, engineering, legal, accounting, audit, IT services, etc.
► personnel leasing services and movable property leasing services
► telecommunication, tele-, radio-services
► forwarding services

The STSU has concluded that if a non-resident with a representative office in Ukraine receives such services, their place of supply for VAT purposes may be either the place of the non-resident’s registration or the place of the representative office’s registration, depending on the agreement’s substance and the actual circumstances of supply.

If a non-resident is the direct recipient of the services, VAT shall not apply because the place of supply is situated outside Ukrainian customs territory. However, if the Ukrainian representative office of this non-resident directly receives the services in question, the place of their delivery should be determined as Ukraine’s customs territory. Consequently, in the latter case, the services will be subject to VAT on a general basis.

Please note that according to the STSU’s Letter No.10279/К/15-1414 of 23 March 2012, a tax clarification is of an individual character and may be applied only by the taxpayer who has obtained it.