With the beginning of the full-scale war in Ukraine, an unprecedented surge of charitable activity took place. In a short time, hundreds of new foundations, volunteer initiatives, public associations, religious organizations, as well as private individuals providing assistance to the military and civilian population have emerged and started to operate. At the same time, the number of people who had to apply for help increased significantly, primarily those who were left without housing, means of livelihood or left the war zone. Tax legislation of Ukraine, formed in other conditions, was not adapted to such a situation. In practice, questions began to arise to which there were no clear answers.
Lawyers from the “Repeshko and Partners” Bar Association, who specialize in tax law, commented on the cases in which charitable assistance can be subject to taxation and what both the recipient and the provider of assistance need to know.
Taxation of charitable assistance is a complex area in which it is important to take into account several factors at the same time: who receives assistance, in what form it is provided (targeted, non-targeted, multi-targeted), as well as to whom exactly and in what amount the funds are paid. Because of this, many questions arise, especially in the conditions of martial law, when thousands of Ukrainians need support. In order to put these issues in order and stimulate charity, on February 25, 2025, the Verkhovna Rada of Ukraine adopted the Law “On Amendments to the Tax Code of Ukraine on the Stimulation of Charity During Martial Law”. It entered into force on March 16 and established clear rules: who is allowed to receive charitable payments without a tax burden, in what amounts, and under what circumstances.
First of all, the law is not one-size-fits-all to help anyone. Tax exemption applies only to certain categories of citizens and only within defined situations. This means that not every transfer to the card is a tax-exempt “charity”. And most importantly, not everyone who received money marked “for treatment” or “for support” is automatically protected from tax liability. In order for aid to be considered exempt from taxation, it must be provided precisely within the limits of the norms defined by law. And here it is important to understand to whom exactly and under what circumstances such assistance is allowed without taxation.
The first and largest category is combatants and security forces who directly participated in hostilities or ensuring the defense of the state. Exemption from taxation applies both to military personnel and employees of security forces, as well as to members of their families, provided that the main person was injured, contused, injured, killed or died as a result of participation in hostilities.
This is about: participants in hostilities, military personnel (reservists, conscripts) and employees of the Armed Forces of Ukraine, NSU, SBU, the Foreign Intelligence Service of Ukraine, the State Border Guard Service of Ukraine, members of the rank and file, senior staff, military personnel, employees of the Ministry of Internal Affairs of Ukraine, policemen and employees of the National Police of Ukraine, who take (have taken) a direct part in the anti-terrorist operation, ensuring its conduct, being directly in the areas of the anti-terrorist operation operations or for the benefit of family members of such combatants who, during participation in an anti-terrorist operation, participation in ensuring its conduct, in the implementation of measures to ensure national security and defense, repulse and deter armed aggression of the Russian Federation in the Donetsk and Luhansk regions, while being directly in the districts and during the implementation of the specified measures, were injured, contused or otherwise injured, died, died as a result of an injury, contusion or injuries received during participation in an anti-terrorist operation, ensuring its implementation, in the implementation of measures to ensure national security and defense, repelling and deterring armed aggression of the Russian Federation in the Donetsk and Luhansk regions, being directly in the districts and during the implementation of the specified measures, or recognized as missing in accordance with the established procedure.
The law clearly stipulates that such assistance can be provided both to the participants in hostilities themselves and to their families, if a person during participation in hostilities: suffered an injury, contusion, or other health damage; died or died as a result of such injuries or was recognized as missing in accordance with the established procedure.
The second category is civilians who suffered from the war. It is not only about those who served, but also about civilians who lived or still live in settlements where an anti-terrorist operation is being conducted or has been conducted; were forced to leave their place of residence due to hostilities. That is, if a person was forced to leave from under shelling, leaving home and work, and at the same time received charitable assistance, such assistance is now not subject to taxation. The state recognizes that this is not profit, but necessary support.
The third category is forced migrants from Crimea. All citizens who lived in the Autonomous Republic of Crimea and were forced to leave the region due to its temporary occupation are entitled to tax-free charitable assistance. This rule applies in accordance with the Law of Ukraine “On Ensuring the Rights and Freedoms of Citizens and the Legal Regime in the Temporarily Occupied Territory of Ukraine”. That is, those who left Crimea after 2014, or as a result of the deterioration of the situation in the occupied territory, and receive assistance, are not obliged to pay taxes on it.
At the same time, the amount of charitable assistance paid or provided by benefactors, in particular by benefactors — natural persons, in accordance with the procedure established by the Law of Ukraine “On Charitable Activities and Charitable Organizations”, is not subject to taxation, if such assistance is provided for the benefit of the following persons:
- Participants in hostilities, military personnel (reservists, conscripts), employees of the Armed Forces of Ukraine, the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the State Border Guard Service of Ukraine, rank and file officers, military personnel, employees of the Ministry of Internal Affairs of Ukraine, other military formations formed in accordance with the laws of Ukraine, voluntary formations of territorial communities, police officers and employees of the National Police of Ukraine, including including those who have suffered injury, contusion or other health damage, as well as those who have died or died as a result of injury, contusion or mutilation. All the listed persons were supposed to participate in the protection of the independence, sovereignty and territorial integrity of Ukraine during a state of war or state of emergency, being directly in the areas where such measures are carried out. Assistance may also be provided for the benefit of family members of such combatants.
- Employees of enterprises, institutions, organizations and civil defense forces who have been involved or are involved and are directly participating in the implementation of measures related to ensuring national security and defense, repelling and deterring armed aggression of the Russian Federation, provided they are in the areas of hostilities during the period of their implementation, in accordance with the procedure established by law. Assistance may also be provided for the benefit of family members of such employees.
- Natural persons who live or have lived in settlements where hostilities took place or are taking place, as well as those who were forced to leave their place of residence due to hostilities in such settlements (internally displaced persons).
- Military personnel (reservists) who, during the defense of the independence, sovereignty, and territorial integrity of Ukraine, suffered injury, contusion, or other health damage during the period of war or a state of emergency, provided they were directly present in the areas where such measures were carried out, as well as for the benefit of family members of such military personnel (reservists), if they were killed or died as a result of injury, contusion, or mutilation.
It is worth knowing that for the purposes of this subsection, the following are recognized as family members of combatants, employees of enterprises, institutions, organizations, civil defense forces, military personnel (reservists), as well as participants of mass public protest actions in Ukraine:
- parents (provided that they were not deprived of parental rights before such a person reached the age of majority);
- grandfather and grandmother, if the parents are deceased;
- the other spouse, if he or she has not remarried;
- minor and/or minor children;
- adult children who study full-time or dually in institutions of professional (vocational-technical), professional pre-higher or higher education – until the moment of completion of education, but not longer than until reaching the age of 23;
- adult children who do not have their own family;
- adult children who have a family, but became persons with disabilities before reaching adulthood;
- persons who were dependents of the deceased or the deceased, if in connection with this they were assigned a pension.
This charitable assistance is not considered an object of taxation in all the listed cases.
Note that the amount of charitable assistance that does not exceed 500 times the minimum wage established by law on January 1 of this year during one reporting (tax) year is not subject to taxation. As of January 1, 2025, the minimum wage is set at 8,000 hryvnias, and therefore the amount up to 4,000,000 hryvnias is not subject to taxation. The purpose of such assistance may relate to the restoration of lost property, housing, social and household needs or other needs in accordance with the list determined by the Cabinet of Ministers of Ukraine.
If the total amount of charitable assistance received during the reporting (tax) year exceeds the specified limit, then the amount exceeding this amount is subject to taxation at the rate of personal income tax of 18% and the military levy of 1.5%, and the taxpayer is required to submit an annual tax return indicating the amount of charitable assistance received.
Separately, we note that the list of needs, the amount of charitable assistance for the satisfaction of which is not included in the taxable income of payers of personal income tax, was approved by Resolution No. 653 of the Cabinet of Ministers of Ukraine dated November 26, 2014. This list includes: restoration of lost property, in particular, the purchase of goods or services necessary for the reconstruction of damaged or destroyed residential and commercial buildings and structures by performing works on reconstruction, restoration, capital or ongoing repairs, development of design or scientific design documentation, conducting its examination, maintaining the customer’s service, carrying out copyright and technical supervision, putting into operation completed objects, as well as provision of household appliances costing up to three amounts of the minimum wage per unit, but no more than three units of various household purposes, furniture with a total cost of up to 15 amounts of the minimum wage, means of transport (cars, motorcycles, mopeds, etc., except for agricultural machinery) worth up to 100 times the minimum wage.
This list also includes the provision of housing, housing and communal services and fuel necessary for cooking and heating the premises, transport services related to the movement of people from the territories where hostilities are being conducted or have been conducted, or from the territories temporarily occupied by the Russian Federation, as well as the provision of means of unhindered access for persons with disabilities and other groups of the population with limited mobility to residential buildings and premises. Assistance for providing items for personal use, such as shoes, clothes, underwear, personal hygiene products and household items (except furniture and household appliances), as well as tools necessary for personal professional activities, in particular sewing or music, is not subject to taxation.
Assistance for the provision of medical care, with the exception of certain cases, is also included in the list of non-taxable needs, as well as provision of food products, with the exception of alcoholic and low-alcohol beverages, provision of children’s goods and baby food. If an individual runs a personal farm and owns or uses agricultural land, charitable assistance can be directed to the purchase of seeds and planting material of agricultural crops for field work, farm and domestic animals (one horse, one cow or heifer, goat or pig), poultry (no more than 20 geese, ducks, chickens, turkeys, etc.), bee colonies (no more than 10), fodder for livestock in the amount necessary for its feeding before the start of driving to pasture or collecting new fodder, agricultural machinery with a total value of up to 50 times the minimum wage, inventory and equipment with a total value of up to 10 times the minimum wage.
Assistance to ensure the attainment or continuation of attainment of a certain educational level, the implementation of measures aimed at the psychological and social rehabilitation of individuals, the provision of legal assistance to individuals for the restoration and protection of their rights in connection with the occurrence of circumstances that led to the provision of charitable assistance, as well as the provision of social services in accordance with the Classifier of Social Services, are also not subject to taxation. At the same time, the taxable income of the taxpayer does not include the amount of charitable assistance, which is accrued for the benefit of natural persons defined by law and is provided both in cash and in kind in accordance with the needs specified in this list. That is, charitable assistance can be provided not only in money, but also in the form of things, equipment, housing, transport, clothing, products, services or other forms that are directly provided for in this document.
It is important that not only charitable organizations can collect donations for charitable purposes, but also individual individuals, even on their own behalf. The only condition under which an individual will not be required to pay the personal income tax of 18% and the military levy of 1.5% of the entire amount collected is that the collection must be made not for his own benefit, but for the benefit of a charity or another person in real need of charitable assistance. All funds collected must be transferred in full to the person or organization for which the collection was made. In this case, the collection will be considered a charitable activity, and not a personal taxable income. In addition, in accordance with the provisions of the tax legislation, the taxable income of an individual does not include charitable assistance – both targeted and non-targeted – if such assistance is provided to persons who suffered as a result of the armed aggression of the Russian Federation against Ukraine during a state of war or emergency. At the same time, it is stipulated that such assistance should be transferred through the state or local budget, or to the bank accounts of charitable organizations entered in the Register of Non-Profit Organizations, or through the Red Cross Society of Ukraine.
This assistance is not included in the taxable income of an individual taxpayer if it is targeted or non-targeted and is provided to such an individual who has suffered as a result of one of the following circumstances: environmental, man-made and other disasters in areas officially recognized as zones of an ecological emergency in accordance with the Constitution of Ukraine – in the limit amounts determined by the Cabinet of Ministers of Ukraine; disasters, accidents, epidemics and epizootics of a national or local nature, which have caused damage or pose a real threat to human health, the natural environment, caused or may cause human casualties or loss of citizens’ property, in connection with which the decision to provide charitable assistance was made by the Cabinet of Ministers of Ukraine or the relevant local self-government body – within the limits of the amounts determined by these bodies, respectively; or as a result of armed aggression of the Russian Federation under conditions of martial law or a state of emergency.
It should be taken into account that the procedure for confirming the status of persons who suffered during the period of war or a state of emergency, in order to exempt from taxation the income received by them in the form of targeted or non-targeted charitable assistance, is established separately by the Cabinet of Ministers of Ukraine.
Another category of charitable assistance that is not subject to taxation is non-targeted charitable assistance, including material, provided by legal entities or individuals for the benefit of the taxpayer during one tax year, if its total amount does not exceed the income limit established on January 1 of the relevant year. In 2025, this amount is 4,240 hryvnias. Within this amount, for example, an enterprise can provide assistance to its employee without tax consequences, or an individual who does not fall into any of the categories of victims listed in the law can receive assistance from one or more charitable organizations during the year — and this assistance will not be taxed.
Therefore, in order for charitable assistance not to be subject to taxation, it is necessary to clearly comply with the requirements for its targeted or non-targeted purpose, amount limits, registration procedure, method of transfer, status of the recipient and the form in which the assistance is provided. The most protected from the point of view of tax risks is the option when the aid comes to the needs of a specific person who has the confirmed status of a victim of war or an emergency situation, and the funds themselves are transferred through an officially registered charitable organization, the local or state budget or the Red Cross of Ukraine.
In the event that a private person makes a collection, it is important not to keep the funds, but to transfer them in full to the person or organization for which the collection was made. Only under this condition, the obligation to pay 18% income tax and 1.5% military levy will not arise. All other options require careful documentation, including substantiation of the allocation of aid, and in the case of exceeding the limit amounts, mandatory submission of a tax declaration.
