How to Claim Your Tax Deduction

The declaration of income by individuals can be carried out not only to fulfill the obligation to pay tax to the budget, but also to enable the refund of previously paid amounts of personal income tax (hereinafter – PIT). This can be done by exercising the right to a tax rebate.

A tax rebate is the amount of expenses actually incurred during the year, by which the law allows to reduce the total annual taxable income received in the form of salary, in cases defined by the Tax Code of Ukraine (TCU).

What are the conditions for granting a tax rebate

1. A tax rebate is granted only to individuals – residents of Ukraine who are not business entities.
2. One can claim a tax rebate if goods, works, or services were purchased specifically from a resident – both legal and natural person, and there is documentary confirmation (receipt, payment order, fiscal or sales receipt, etc.) indicating the cost and period of purchase.
3. The tax rebate cannot exceed the amount of the taxpayer's salary for the reporting year.

What expenses can be included in a tax rebate

These are expenses defined by Article 166 of the TCU:

• part of the amount of interest paid on a mortgage loan, provided that this residential building (apartment) is the primary place of residence
• charitable contributions to non-profit organizations (within 4% of the total annual income)
• payment for personal education of the taxpayer or a first-degree family member in domestic vocational and higher education institutions
• cost of medical services, including the purchase of medicines, except for expenses specified in sub-paragraphs 'a'-'e' of sub-paragraph 166.3.4 of the TCU
• payments under long-term life insurance contracts (for 2020, these amounts are: for personal insurance – UAH 2940, for insurance of a first-degree family member – UAH 1470 per month)
• expenses incurred as payment for reproductive technologies
• expenses for payment of state services incurred during child adoption
  funds paid in connection with the conversion of a car to biological fuels (bioethanol, biodiesel, compressed or liquefied gas, other types of biofuels)
• expenses related to the acquisition or construction of affordable housing.

When to file a declaration of property status and income

In order to exercise the right to receive a tax rebate, it is necessary to file a declaration of property status and income by December 31 of the year (if there is a tax obligation to declare other income – by May 1) following the reporting year, and provide copies of supporting primary documents. If the taxpayer does not exercise this right based on the results of the reporting year, it is not carried over to subsequent years (sub-paragraph 166.4.3 of the TCU).

The amount of PIT overpaid to the budget is either credited to the taxpayer's specified bank account or sent by mail to the address indicated in the declaration, within 60 calendar days from the date of filing the declaration with the tax service.

We want to emphasize that the practice of refunding paid PIT amounts is entirely real. Therefore, if you have grounds to receive a tax rebate, we advise you to exercise this right.

For questions regarding the nuances of filling out the Declaration of Property Status and Income, or if you need other explanations regarding the tax rebate, you can always contact us.