Property tax for non-profits in Ukraine 2026: when leasing keeps the exemption
A non-profit sports organisation whose non-residential property falls under subparagraph “y” (й) of sub-clause 266.2.2 of Ukraine’s Tax Code does not lose its exemption from property tax if it leases, finance-leases or lends that property free of charge. There are two conditions: the organisation stays in the Register of non-profit institutions and organisations and uses its income solely for its upkeep and for the purpose and activities set out in its statute.
The State Tax Service (STS) office for Ivano-Frankivsk region published this clarification on 23 June 2026. It needs careful reading: the headline speaks about buildings of non-profit organisations in general, but the rule the tax authority relies on covers a specific list of sports facilities. Below we explain who the exemption actually covers, what happens after removal from the Register, and which documents the accountant should keep so that both the tax authority and the auditor see a lawful exemption. We described the conditions of non-profit status in detail in our article on the non-profit status code.
What has changed
The rule is not new; what is new is the tax authority’s position on leasing. In its clarification of 23.06.2026 (if.tax.gov.ua) the STS office for Ivano-Frankivsk region recalls the logic of the Tax Code.
- Under sub-clause 266.2.1, the taxable object is residential and non-residential real estate, including a share in it.
- Subparagraph “y” of sub-clause 266.2.2 excludes certain non-residential sports facilities from taxation if their owners are non-profit and included in the Register of non-profit institutions and organisations (see the list below).
- The procedure for keeping the Register is set by the Cabinet of Ministers (sub-clause 133.4.5). It was approved by Cabinet Resolution No. 440 of 13.07.2016, and under paragraph 3 of that procedure the Register is kept by the STS.
- The income of a non-profit organisation is used solely to finance its upkeep and the purpose and activities defined in its founding documents (first paragraph of sub-clause 133.4.2).
The tax authority’s conclusion: the key features of the exemption are being in the Register and using income for statutory purposes. If these conditions are met, leasing, finance-leasing or lending the exempt property does not remove the right to the exemption.
Who is affected
Subparagraph “y” covers two groups of facilities.
- State and municipal Olympic training centres, schools of higher sports excellence, public physical health centres, centres for physical culture and sport for persons with disabilities, and children’s and youth sports schools.
- Facilities of all-Ukrainian physical culture and sports societies, their local branches and separate subdivisions: Olympic training centres, schools of higher sports excellence, children’s and youth sports schools and sports facilities.
In its clarification the tax authority links the exemption to the owner being non-profit and included in the Register. An ordinary NGO or charitable foundation with an office or a warehouse does not fall under this subparagraph. Such organisations need to look for other grounds for exemption in Article 266 of the Tax Code; if there are none, the tax is calculated on general terms. We do not cover the other subparagraphs of sub-clause 266.2.2 in this article.
What to do and by when
- Check whether your facility is on the subparagraph “y” list. Compare the purpose of the building in the title documents with the list: children’s and youth sports school, school of higher sports excellence, Olympic training centre, sports facility of a sports society and so on.
- Check your status in the Register. Keep an extract or a screenshot showing inclusion in the Register of non-profit institutions and organisations, and check it at least once a quarter.
- Structure the lease so the money goes to statutory purposes. The lease, finance lease or loan-for-use agreement should state the property and the term. Record rental income separately so it is clear which statutory expenses it funds.
- Watch for removal from the Register. If the organisation is removed, a property tax return (for real estate other than land) must be filed within 30 calendar days of the removal. The tax is payable from the month following the month of removal.
- Build an audit file. Title documents, statute with purpose and activities, evidence of Register status, lease agreements, and a calculation of how rental income was used.
| Situation | Property tax | Documents to keep |
|---|---|---|
| Sports facility on the “y” list, owner is non-profit and in the Register | Not a taxable object | Title documents, evidence of Register status, statute |
| The same facility is leased, finance-leased or lent | Exemption is kept if the organisation is in the Register and income goes to statutory purposes | Agreements, rent accounting, calculation of its use |
| The organisation is removed from the Register | Tax on general terms from the month following the month of removal | Tax return within 30 calendar days of removal |
| Office or warehouse of an NGO or foundation outside the “y” list | Subparagraph “y” does not apply | Separate review of other grounds in Article 266 |
Common mistakes and risks
- “We are non-profit, so our property is not taxed.” Register status alone does not exempt any building. Subparagraph “y” is tied to a specific list of sports facilities.
- Rent that goes elsewhere. The exemption for leased property rests on income being used solely for the organisation’s upkeep and statutory purposes. If rent is spent on anything else, both the exemption and non-profit status itself are at risk.
- Missed deadline after removal. The 30 calendar days for the return run from the day of removal from the Register. Organisations often learn about removal late, so status should be checked regularly.
- No paper trail. Without separate accounting of rental receipts and expenses the auditor has nothing to confirm the statutory use of income.
We wrote separately about keeping non-profit status itself: how not to lose non-profit status.
FAQ
Does a non-profit organisation in Ukraine pay property tax if it leases out premises?
For sports facilities on the list in subparagraph “y” of sub-clause 266.2.2, the STS explains that leasing, finance leasing or lending does not remove the exemption if the organisation is in the Register of non-profits and uses its income solely for statutory purposes.
Are all NGOs in Ukraine exempt from property tax?
No. Subparagraph “y” covers specific sports facilities of non-profit organisations included in the Register. For other buildings of NGOs and foundations, other rules of Article 266 have to be checked.
What should an organisation do if it is removed from the Register of non-profits?
File a property tax return for real estate other than land within 30 calendar days of removal. The tax is payable from the month following the month of removal.
How we help
During audits we review the taxes of non-profit organisations: Register status, grounds for exemptions, accounting of rental income and its use for statutory purposes. See NGO audit, NGO accounting and accounting recovery. We also cover NGO taxes in our free webinars for NGOs. You can reach us via contacts.
Prepared by the MK Audit team