On 5 August 2026, the State Tax Service of Ukraine published guidance clarifying the eligibility criteria and procedural steps through which universities and other eligible educational institutions may claim a tax deduction for qualifying rental expenses incurred in the course of their operational activities. The clarification, issued under Part 2 of Article 219 of the Tax Code of Ukraine and detailed in Methodological Letter No. 145 of the State Tax Service, responds to frequent inquiries from the higher education sector regarding the deductibility of lease payments for campus facilities, research laboratories, student dormitories, and administrative offices. The guidance specifies that to qualify for the deduction, the rental agreement must be formally executed with a licensed lessor, the property must be used exclusively for stated educational or research purposes, and the total annual rental expense must be substantiated with authenticated lease contracts, payment receipts, and a justified business need statement. The Service further clarified that the deduction is subject to a cap expressed as a percentage of the institution’s total taxable income for the fiscal year, and that any expenses exceeding this threshold must be carried forward to subsequent reporting periods in accordance with the prescribed amortization schedules. The directive also outlines the documentation audit trail that the Tax Service may request during routine compliance checks, including the original lease agreement, bank transfer records, and correspondence with the lessor regarding property maintenance and usage rights. By providing this clear framework, the Tax Service aims to support the financial sustainability of Ukraine’s higher education sector while ensuring that tax deductions are claimed in a transparent, verifiable, and code-compliant manner.
Key Takeaways
- Eligibility Criteria for Rental Expense Deductions: Universities may deduct rental costs for facilities used exclusively in educational or research activities, provided that the lease is properly executed, payments are documented, and the annual expense remains within the statutory percentage cap of total taxable income.
- Required Documentation and Audit Trail: Institutions must retain the original lease contract, audited payment receipts, and a written justification of business need, as the Tax Service may request these records during compliance reviews or desk audits.
- Carry-Forward Provisions for Excess Expenses: Rental expenses exceeding the annual deduction cap may be carried forward to future fiscal years, subject to the Service’s prescribed scheduling and reporting mechanisms.
Disclaimer:This article is compiled and summarized based on publicly available information and is for general information and academic exchange purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. For tax planning, please consult a qualified professional tax advisor or legal counsel.
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