Taxation of VAT operations for the transfer of property on a gratuitous basis under a loan agreement

• According to the Civil Code of Ukraine, a loan agreement involves one party (the lender) transferring money or other items to another party (the borrower), who agrees to return the same amount of money or items.
• The Tax Code of Ukraine states that VAT is applicable to transactions involving the transfer of goods, including free transfers and transfers of ownership rights.
• The taxable base for VAT is determined based on the contractual value of the goods or services, taking into account certain taxes and fees.
• The base for taxation cannot be lower than the purchase price of the goods or services, except for regulated prices, gas supplied to the population, and electricity sold on the electricity market.
• The contractual value includes any amounts of money, material and non-material assets transferred to the taxpayer as compensation for the cost of goods or services.
• The contractual value does not include penalties, interest, inflation costs, damages, or compensation for lost profits resulting from the non-performance or improper performance of contractual obligations.
• Therefore, the free transfer of property under a loan agreement is subject to VAT taxation.

Source: od.tax.gov.ua

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---