Tax lien is not just a legal concept, but a real tool for protecting the interests of the state, which ensures the repayment of tax debts. Read below how and when it arises, what property it applies to, what restrictions the legislation provides.
The concept of tax lien
A tax lien is an effective mechanism that guarantees the repayment of a tax debt. It arises from the date of the tax debt and applies to any property of the taxpayer that is in their ownership (economic management or operational management) on the date of the occurrence of such a right and the book value of which corresponds to the amount of the taxpayer's tax debt, as well as to other property to which the taxpayer will acquire ownership rights in the future.
To ensure that the taxpayer fulfills his obligations as defined by the Tax Code of Ukraine, the property of a taxpayer who has a tax debt exceeding 180 non-taxable minimum incomes of citizens (UAH 3,060.00) is transferred to tax lien.
The right of tax lien arises from the date of the tax debt and does not require written registration. Such a right applies to any property of the taxpayer that is in their ownership (economic management or operational management) on the date of the emergence of such a right and the book value of which corresponds to the amount of the taxpayer's tax debt, as well as to other property to which the taxpayer will acquire ownership rights in the future.
Legal grounds for the emergence of a tax lien
According to item 89.1 of the Tax Code of Ukraine, the right to a tax lien arises in the following cases:
- failure to pay within the terms established by the Tax Code of Ukraine the amount of the monetary obligation independently determined by the taxpayer in the tax return - from the day following the last day of the specified term;
- failure to pay within the terms established by the Tax Code of Ukraine the amount of the monetary obligation independently determined by the controlling body - from the date of the tax debt;
- occurrence of the event specified in item 100.11 of the Civil Code of Ukraine - from the date of conclusion of the agreement on installment payment, deferral of monetary obligations.
Item 100.11 of the Tax Code of Ukraine stipulates that installments, deferral of a monetary obligation or tax debt are provided separately for each tax and fee.
If the amount of the monetary obligation or tax debt declared for installment or deferral is 1 million UAH or more, installment or deferral is granted only on the condition that:
- transfer of property of a taxpayer as a tax pledge, the book value of which is equal to or exceeds the amount of monetary obligation declared before installment or deferral, - in the case of installment or deferral of monetary obligations;
- taxpayer's property is subject to tax lien, the book value of which is equal to or exceeds the amount of tax debt declared before installment or deferral, - in the case of installment or deferral of tax debt.
Property not subject to tax lien
According to item 89.2 of the Tax Code of Ukraine, taking into account the provisions of Article 89 of this Code, the right of tax lien applies to any property of a taxpayer that is in their ownership (economic management or operational management) on the date of the occurrence of such a right and the book value of which corresponds to the amount of the taxpayer's tax debt, except for the cases provided for in item 89.5 of the Tax Code of Ukraine, as well as to other property to which the taxpayer will acquire ownership rights in the future.
If the book value of the property subject to a tax lien is less than the amount of the taxpayer's tax debt, the tax lien right applies to such property.
In the event of an increase in the amount of tax debt, an inventory act is drawn up to the amount corresponding to the amount of the taxpayer's tax debt, in accordance with the procedure provided for in Article 89 of the Tax Code.
Documentary confirmation of tax lien
Property subject to tax lien is recorded in an inventory act (paragraph 1, item 89.3 of the Tax Code of Ukraine). The inventory act includes liquid property that can be used as a source of tax debt repayment.
The description of property in tax lien is carried out on the basis of a decision of the head (their deputy or authorized person) of the regulatory body, which is presented to the taxpayer who has a tax debt.
The right of tax lien does not apply to property defined in item 87.3.7 of the Tax Code of Ukraine, to mortgage assets belonging to the issuer and serving as collateral for the relevant issue of fixed-income mortgage certificates, to cash income from these mortgage assets until the issuer fully fulfills its obligations under this issue of fixed-income mortgage certificates, as well as to the composition of the mortgage coverage and cash income from it until the issuer fully fulfills its obligations under the relevant issue of ordinary mortgage bonds.
The right to tax lien does not apply if the total amount of the taxpayer's tax debt does not exceed 180 non-taxable minimum incomes (3,060.00 UAH).
