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

Camiel van der Meij, Partner & TLS Leader,
Dmytro Donets, Partner at Attorney’s Association “PwC Legal”,
Denis Shendryk, Senior Manager, Tax and Legal Services,
Inna Andrushchenko, Manager, Tax and Legal Services,
75 Zhylyanska Street | Kyiv | Tel:  +380 44 354 0404 | Fax: +380 44 354 0790 | | 

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