In land issues, for single tax payers, not only ownership rights but also the method of using the land plot are of decisive importance. Leasing part of the property can change the tax status and create obligations that the business will learn about after the fact. Key tax guidelines that single tax payers of groups II-III who lease part of the land plot should consider in advance are discussed below.
Nuances of paying land tax
Land payment, according to item 14.1.147 of the Tax Code of Ukraine (hereinafter - the Tax Code), is a mandatory payment as part of the property tax levied in the form of land tax or rent for land plots of state and municipal property.
The objects of taxation by land payment are, in particular, objects of taxation by land tax, namely:
- land plots owned;
- land shares owned;
- land plots of state and municipal property that are owned on the right of permanent use.
Paragraph 1, item 284.3, Article 284 of the Tax Code stipulates that if taxpayers who benefit from benefits from this tax lease land plots, individual buildings, structures or their parts, the tax for such land plots and land plots under such buildings (their parts) is paid on a general basis, taking into account the adjacent territory.
Part 1 of Article 797 of the Civil Code of Ukraine (hereinafter - the Civil Code) states that the fee charged to the tenant of a building or other capital structure (their separate part) consists of a fee for its use and a fee for the use of the land plot.
Features of taxation of land leases for single tax payer
Single tax payers of the second and third groups who have acquired ownership or permanent use of a land plot and lease it and/or real estate located on such a land plot, have an obligation to pay land tax and submit a tax return on land payments on a general basis.
Part 1 of Article 795 of the Civil Code states that the transfer of a building or other capital structure (a separate part thereof) to the tenant is formalized by an appropriate document (act), which is signed by the parties to the contract.
According to Parts 1 and 2 of Article 796 of the Civil Code, simultaneously with the right to lease a building or other capital structure (their separate part), the lessee is granted the right to use the land plot on which they are located, as well as the right to use the land plot adjacent to the building or structure, in the amount necessary to achieve the purpose of the lease.
In the lease agreement, the parties may determine the size of the land plot that is transferred to the lessee. If the size of the land plot is not specified in the agreement, the lessee is granted the right to use the entire land plot owned by the lessor.
For a land plot on which a building is located and is used by several legal entities or individuals, the tax is charged to each of them in proportion to the part of the building area that is used by them, taking into account the adjacent territory.
Single tax payers are exempt from the obligation to charge, pay and submit tax reports, in particular, in accordance with point 4 of item 297.1 of Article 297 of the Tax Code, from property tax in the part of land tax for land plots used by single tax payers of the first - third groups for conducting economic activities (except for activities involving the provision of land plots and/or real estate located on such land plots for rent (lease), loan, or other right of use (including under emphyteusis terms)) and single tax payers of the fourth group for conducting agricultural production.
Therefore, if single tax payers of the first to third groups do not specify the size of the land plot in the lease (rental) agreement or loan agreement or do not take into account the requirements of Article 286 of the Tax Code, then the specified payers pay land tax for the entire land plot.
If the lease (rent) or loan agreement specifies the size of the land plot, taking into account Article 286 of the Tax Code, then the specified payers pay land tax only for the land plot that was leased (rented) or loaned.
