LANDMARKETA sale does not always create a tax charge. In defined cases, the seller’s proceeds may be exempt from both personal income tax and military levy. The land’s origin, ownership period and earlier real-estate sales in the same year matter.
Confirm the final treatment with the closing notary or a Ukrainian tax adviser using the seller’s actual documents.
01 · WHEN AN EXEMPTION MAY APPLY
When sale proceeds may be tax-exempt
An exemption may apply when the agricultural parcel was obtained directly through privatisation of state or municipal agricultural land, allocated in kind to a former land-share holder, or inherited; the property has been held for more than three years unless inherited; and the seller may use the Article 172 annual exemption.
The State Tax Service confirms that a qualifying first sale of land allocated to a former land-share holder or inherited can be exempt from both personal income tax and military levy.
What determines the result
Before closing, establish how the land was acquired, whether it was allocated from a land share, the ownership period and every other real-estate disposal by the seller during the same year.
02 · INDICATIVE RATES
Personal income tax and military levy
| Situation | PIT | Military levy |
|---|---|---|
| First qualifying sale of land allocated to a former land-share holder; held for more than three years | 0% | 0% |
| First qualifying sale of inherited land, subject to the other conditions | 0% | 0% |
| Land does not meet the exemption or has been held for less than three years and was not inherited | usually 5% | 5% |
| Second taxable sale of qualifying real estate in the year | usually 5% | 5% |
| Third and subsequent real-estate sales | generally 18% | 5% |
| Third or subsequent sale of inherited property | a 5% exception may apply | 5% |
The order and category of earlier transactions may change the outcome. This table is not a transaction-specific calculation.
Is the first sale always tax-free?
No. The parcel must fall within Article 172.1, the holding-period rule must be met where applicable, and the documents must prove how the land was acquired.
03 · HOLDING PERIOD AND INHERITANCE
When there is no three-year wait
The three-year holding condition does not apply to inherited property, but all other exemption conditions still require review.
Second and subsequent sales
The Tax Code looks at transactions across the entire tax year. The notary should be told about earlier land and other real-estate sales.
01 A first qualifying Article 172.1 sale may be exempt.
02 A second sale of that category is typically taxed at 5% PIT.
03 A third or later sale is generally taxed at 18% PIT.
Exceptions exist for inherited property and other transaction sequences, so the result should not be determined only by calling the transaction “first”, “second” or “third”.
04 · CALCULATION AND PAYMENT
The amount on which tax is calculated
Taxable proceeds are based on the contract price, but not below the value in the relevant electronic valuation certificate or a registered valuation report. If the contract price is higher, the higher amount is used.
For certain third and subsequent sales, documented acquisition expenses may reduce taxable income. The availability of this deduction and any filing duty require separate advice.
When tax is paid
For a transaction between individuals, the seller generally pays the applicable amounts before notarisation. If the buyer is a company or self-employed person, it generally acts as the tax agent.
05 · CLOSING PREPARATION
Documents to prepare
- evidence of title and current registered-rights information;
- cadastral number and a State Land Cadastre extract;
- the document under which ownership was acquired;
- inheritance certificate, where applicable;
- documents showing allocation of the former land share in kind;
- details of every real-estate sale in the current year;
- evidence of acquisition expenses if a deduction is intended;
- electronic valuation certificate or registered valuer’s report;
- the lease if the parcel is leased.
See also Documents Required to Sell Agricultural Land in Ukraine and How to Sell Leased Agricultural Land.
FOR AGRICULTURAL LANDOWNERS
Value the land and prepare for the sale
LANDMARKET can provide a preliminary market assessment and help identify the documents required for the next step.FAQ
Frequently asked questions
Is the first sale of agricultural land always tax-exempt?
No. The exemption may apply only when the land and seller meet Article 172 of the Tax Code, including the rules on origin, ownership period and use of the annual exemption.
Must inherited land be held for three years?
No. The three-year holding condition does not apply to inherited property, although the other exemption conditions must still be checked.
Does a lease prevent the tax exemption?
The existence of a lease does not by itself determine the tax rate. It does affect the sale procedure, tenant notice and the document package.
Does selling an apartment in the same year count?
It may. Earlier real-estate transactions can affect the tax treatment of a later sale, so every transaction in the same tax year should be disclosed to the notary.
Can documented expenses reduce taxable income?
In cases covered by paragraph 172.2, documented acquisition expenses may be deductible. This may also trigger a filing obligation and requires transaction-specific advice.
Official sources
This material is for information only and is not individual legal, tax or valuation advice. The applicable rules and transaction file should be confirmed with a Ukrainian notary or professional adviser.