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Transfer of rights: should VAT be charged?

  • The tax authorities have clarified the formation of tax liability and tax credit for VAT payers when transferring the right to claim.
  • According to the Civil Code of Ukraine, a creditor in an obligation can be replaced by another person through the transfer of their rights to another person (transfer of the right to claim).
  • The transfer of debt agreement is usually made in the form of a tripartite agreement (creditor, original debtor, new debtor).
  • The transfer of the right to claim is an operation of transferring the creditor’s rights to a new creditor with or without compensation for the value of the debt.
  • The formation of tax liabilities and tax credits for VAT is governed by the Tax Code of Ukraine.
  • The transfer of debt agreement does not have tax consequences for VAT, as it involves the transfer of an obligation that is not goods or services.
  • VAT is applicable to transactions of goods/services supplied within the customs territory of Ukraine.
  • Since the transfer of debt does not involve the supply of goods/services, there are no tax liabilities for VAT in such transactions.
  • Each specific case of taxation related to the transfer of the right to claim should be considered based on the relevant documents.
  • For more detailed answers to specific questions, it is recommended to seek individual tax consultation from the controlling authorities.

Source: news.dtkt.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.

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