Exemption from payment of pension fees for purchased housing: who it concerns and how to use it was researched by T. Borysenko

Recently, many Mass Media reported about the abolition of the pension tax by the Cabinet of Ministers of Ukraine for citizens purchasing housing for the first time. Is it really so?

The answer to this question was sought by the lawyer of Skliarenko, Sydorenko and Partners, Tetiana Borysenko, in an article for the publication Zakon i Biznes.

As a general rule, all individuals and legal entities purchasing real estate must pay a mandatory state pension insurance levy on the sale and purchase of real estate. Size - 1 percent of the value of the property specified in the contract of purchase and sale.

This rule is enshrined in clause 15-1 of the Procedure for paying the fee for compulsory state pension insurance from certain types of business transactions, approved by the Resolution of the Cabinet of Ministers of Ukraine dated 03.11.98 No. 1740, and provided for several exceptions. In particular, citizens who purchased housing and were on the waiting list for housing or who purchased housing for the first time were exempted from paying the Pension Fund fee. Therefore, in fact, this category of citizens did not have to pay the fee before.

But in practice, this rule did not work, since another prescription of the same Procedure (clause 15-3) established that the notarization of contracts for the sale and purchase of real estate is carried out in the presence of documentary evidence of payment of the fee for compulsory state pension insurance from transactions in the purchase and sale of real estate. In the absence of the document on payment of the fee notaries simply denied to citizens in the certification of contracts.

The only way out of the situation was going to court with a claim for the return of the mistakenly paid funds. Moreover, the judicial practice in this matter in most cases was on the side of the payer. The process of returning one's interest was hampered only by the overload of administrative judges and, as a consequence, by the length of the proceedings. So, in open simplified proceedings, the case could be considered for more than a year. For example, the District Administrative Court of the city of Kiev puts cases opened in July this year for consideration next year.

However, on September 29, the Resolution of the Cabinet of Ministers of September 23, 2020 No. 866 came into force. They made certain changes to the Procedure, which can become that magic pill that will help real estate buyers really become free from unnecessary expenses.

How to exercise this right - read the full version of T. Borysenko's article.