The State Tax Service has clarified when volunteer contributions are not subject to taxation
8 May 06:25
In Ukraine, volunteers are exempt from paying taxes on funds raised or property received, provided they comply with legal requirements. The main conditions are: being listed in the official Volunteer Registry, using the funds for their intended purpose, and maintaining documentation to verify expenses. This was reported by the State Tax Service, according to "Komersant Ukrainian"
When charitable aid is not taxed
According to the State Tax Service, charitable aid is not included in the taxable income of an individual volunteer if that person is listed in the official Register of Volunteers.
However, registration alone is not the only condition. It is important that the funds raised or property purchased be directed specifically to assist the categories defined by law.
This includes, in particular, assistance to:
- military personnel;
- law enforcement officers;
- combatants;
- victims of war;
- family members of such individuals.
Assistance may be provided either directly to the recipients or through government agencies, including the Ministry of Defense, the National Guard, the Security Service of Ukraine, the police, and other military units.
What Amount Is Tax-Exempt
Only the portion of funds actually used for charitable aid is tax-exempt. Additionally, documented expenses incurred by the volunteer in connection with providing this aid are not included in taxable income.
In other words, it is important for volunteers to keep proof of expenses: receipts, invoices, payment documents, transfer certificates, waybills, and other documents showing exactly where the collected money or property was directed.
When tax benefits do not apply
The State Tax Service notes: tax benefits do not apply automatically to any fundraising.
If a volunteer collects money into their own account and then directs it not directly to the beneficiaries specified by law, but, for example, transfers it to a charitable foundation or purchases a car and donates it to the foundation, such a transaction may not qualify for the preferential tax treatment.
In such a case, the amount of funds raised may be considered the individual’s income. Accordingly, it is included in the total annual taxable income and taxed on general grounds as other income.
What is the main condition for a volunteer
The key to applying tax benefits is the targeted use of charitable funds.
In other words, it is important not only to raise money for aid but also to properly demonstrate that it was used specifically for charitable purposes and transferred to the categories of individuals or organizations specified by law.
That is why volunteers should take care in advance to:
- being listed in the Volunteer Registry;
- using a separate account for donations;
- keeping all documents regarding receipts and expenditures;
- confirming the transfer of aid to the final recipients.
How long do these rules apply?
Tax regulations for volunteer aid remain in effect throughout the entire period of activities to ensure national defense, as well as until the end of the year following the year in which such activities conclude or the state of war or emergency is lifted.
