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Donations to Ukraine will be tax deductible

30. 3. 2022Lenka Polanská

On 9 March 2022, the Government approved and submitted to the Chamber of Deputies a draft act extending the tax benefits of charitable activities in support of Ukraine’s defence efforts against aggression by Russia (hereafter to be referred to as the “Act”). The Act also implements an income tax exemption on selected donations for recipients. The Act is expected to be negotiated by the Chamber of Deputies at the beginning of April 2022.

The Act increases the range of recipients and purposes of gifts and the amount of possible deduction from the income tax base. The proposed changes are intended to apply to all those who have made and will make gifts in 2022, even before the Act comes into force. Corporations and individuals will claim the value of donations on tax returns filed for 2022.

In brief

  • It should be newly possible to deduct from the tax base the value of donation provided directly to Ukraine or its territorial self-government units, as well as to corporations or individuals with their registered office or residence in Ukraine.
  • It should also be possible to deduct the value of donations made for the purpose of supporting the defence efforts of the State of Ukraine and also made directly to Ukraine or to Ukrainian non-profit organisations.
  • It should be possible to deduct from the tax base for 2022 donations amounting up to 30% of the tax base.
  • Non-monetary donations made in aid of Ukraine may be claimed directly as a tax deductible expense.
  • From the perspective of the recipient of the donation, the amendment extends the application of the income tax exemption to situations where the donation is received in support Ukraine’s defence efforts. Therefore, the taxpayer providing the donation would not have to pay withholding tax in the Czech Republic.
  • The Act proposes fully to exempt the income of an employee in the form of accommodation provided by an employer to an employee and his/her family members residing in Ukraine.
  • The law also proposes to exempt from income tax for an employee a monetary donation received from his/her employer to help him/her in a difficult life situation.
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