LETTER OF THE STATE TAX SERVICE OF UKRAINE

of March 16, 2012 No. 7554/7/15-3417-26

VAT and trust management

The State Tax Service of Ukraine considered the letter of PAT concerning the taxation of transactions on transfer of property rights according to credit agreements in trust management of the joint-stock company and reports.

According to subitem 196.1.1 of Item 196.1 of article 196 of the Tax Code of Ukraine of 02.12.10 No. 2755-VI (further - the Code) are not the transaction taxation object on release (issue), placement in any forms of government and sales (repayments, the redemption) for means of securities which are released (emitted) by subjects of business activity, the National Bank of Ukraine, the Ministry of Finance of Ukraine, local government bodies according to the law, including investment and hypothecation certificates, certificates of fund of real estate transactions, derivatives, and also corporate laws expressed in others, than securities, forms; to exchange of the specified securities and corporate laws expressed in others, than securities, forms, on other securities; raschetnokliringovy, registratorsky and depository activity in the security market, and also activities for asset management (including pension assets, funds of bank management), according to the law and other types of professional activity in the stock market which are subject to licensing according to the law.

Fund of bank management according to subitem 14.1.259 of Item 14.1 of article 14 of the Code are means of members of funds of bank management and other assets which are in trust management of authorized bank according to the law.

Considering stated, activities of authorized bank (in this case - the joint-stock company) on asset management (including funds of bank management) according to subitem 196.1.1 of Item 196.1 of article 196 of the Code is not the taxation object of the VAT.

As for transaction on transfer of property rights according to credit agreements in trust management, it should be noted the following.

According to the Methodical instructions for inspection of banks "System of Risks Assessment" of Board National bank of Ukraine approved by the resolution of Board of the National Bank of Ukraine of 15.03.04 No. 104, trust management are transactions of banks on property management and accomplishment of other services in interests and at the request of clients as the authorized representative.

According to part 1 of Article 1029 of the Civil code of Ukraine of 16.01.03 No. 435-IV under the agreement of property management one party (ustanovitel of management) transfers to the second party (manager) to certain term property to management, and the second party shall exercise for a fee on its own behalf control of this property for the benefit of ustanovitel of management or person (beneficiary) specified to them.

According to Item 185.1 of article 185 of the Code the taxation object of the VAT are transactions of taxpayers on delivery of goods/services which place of delivery is located not customs area of Ukraine, according to article 186 of the Code.

Delivery of goods according to subitem 14.1.191 of Item 14.1 of article 14 of the Code is any transfer of the right to the order goods as the owner, including sale, exchange or donation of such goods, and also delivery of goods by a court decision.

According to Item 189.4 of article 189 of the Code taxation basis for goods/services which are transferred/turn out within commission agreements (consignment), bail, trust management is the delivery cost of these goods determined according to the procedure, stipulated in Clause 188 Codes.

Date of increase in the tax liabilities and the tax credit of taxpayers which perform delivery/receipt of goods/services within commission agreements (consignment), bails, orders, trust management, other civil agreements and without the property right to those goods / services is determined by the rules established by articles 187 and 198 of the Code.

Considering stated, by transfer of property rights by banks according to credit agreements in trust management to authorized bank (in this case - the joint-stock company), such banks for the date determined by article 187 of the Code have tax liabilities on the VAT proceeding from the cost of such property rights according to credit agreements.

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