REALWorld Law

Sale and purchase

Taxation of asset deals

Which taxes are relevant/which transaction costs will be incurred when buying real estate as an asset (asset deal) and how are the transaction costs shared between the buyer and seller?



In the case of asset sales, VAT is payable at the rate of 20%. The VATable consideration in respect of such transactions cannot be less than the book value of the property asset as of the beginning of the tax period during which it is disposed of (or the arm's length value if the property asset is not included in the accounts). The sale of plots of land (without buildings and/or other constructions) is not subject to VAT.

State duty (calculated according to the value of the transaction), pension fund duty, state registration fees, legal fees, technical and financial consultants' fees etc may apply.

State duty applies by state notaries as a fee for notary services at 1% of the contractual value of the real estate being transferred. As a matter of practice, private notaries charge fees for their services in the amount no less than state duty.

Pension fund duty is paid by a purchaser of real estate at 1% of the value of the real estate (excluding VAT) indicated in the sale and purchase agreement.

The notary's fees are divided between the parties as agreed by the parties. The amount of the state registration fee varies depending on the procedure for state registration and the type of real estate involved, ie increased fees apply to the state registration of complex multi-element real estate developments and for expedited state registration.

The state registration fee for the registration of title to real property is UAH 227.

Real Estate agencies' charges are around 2.5% to 5% of the contractual price.