Tymofii Sikorskyi: the new regulation of real estate in connection with COVID-19


On March 30, 2020 Verkhovna Rada adopted the Law of Ukraine “On Amending Certain Legislative Acts to Provide Additional Social and Economic Guarantees in relation to the Spread of Coronavirus Disease (COVID-2019)”.

This law introduces the following key real estate provisions:

1. Refund of land payment and real estate tax for April 2020

- Legal entities and individuals do not pay land tax and rent for land in state and communal ownership, as well as real estate tax for non-residential real estate from March 1 to March 31, 2020 (previously – until April 30, 2020). That is, the law provision that these taxes would not be paid for April 2020 was abolished.

- Payers are allowed to correct the data in the already submitted declarations for March 2020 only (meaning it can show zero for March).

- Payers who have already submitted declarations with “zero” marker for March and April 2020 must submit new adjusting declarations and re-show the April 2020 income level.

- Due to this adjustment, sanctions are not applied to taxpayers in accordance with Article 50 of the Tax Code (from 3 to 5 percent of the understated tax amount) and no penalties are applied according to Article 120 of the Tax Code (5 percent of the understated tax amount).

- Land fee and real estate tax for April 2020 is payable at the location of the land/non-residential real estate property by June 30, 2020. That is, the payment for April 2020 is postponed for one month.

- The mentioned reliefs (for land payment) apply only to the land used in economic activities. There is no such restriction on non-residential real estate property.

- Real estate tax and land payments rates remained unchanged. However, local authorities are given the right in 2020 to reduce their previously accepted rates for such taxes.

2. Exemption from rent

- From the moment of quarantine being established (that is from March 12, 2020) until its official ending, the tenant is exempted from payment for the use of property in accordance with Part 6 of Art. 762 of the Civil Code. It should be reminded that the mentioned article provides for the exemption of the tenant from payment for a period during which he could not have used the property because of circumstances for which he is not responsible. The restriction applies not only to real estate but also to movable property. That is, if the property is rented for activities that are prohibited on the basis of relevant regulations (for example, a cafe, restaurant, shopping malls, sports club, etc.), then the rent for such property can be not paid.

- The law does not exempt the tenants from paying or refunding utility bills and maintenance payments for leased property (security, fire watch, cleaning, etc.).

Based on the analysis of the adopted law, it is obvious that the above provisions will be applied differently (for example, someone will try not to pay rent even for an apartment, and someone, on the contrary, will bill unreasonable utility bills for the maintenance of the premises).

Therefore, we urge you to negotiate with counterparties to resolve issues on lease payments and land tax payments and in the most difficult cases – entrust the legal settlement of the matter to the professionals.