LETTER OF THE STATE TAX SERVICE OF UKRAINE

of January 12, 2012 No. 605/6/15-1215

GNSU considered the letter concerning the moment of inclusion in structure of expenses of the taxpayer of the amounts of royalty and reports.

According to paragraph one of subitem 14.1.225 of Art. 14 of the Tax code of Ukraine (further - the Code) royalty - any payment received as remuneration for use or for provision of the right to use of any author's and related right to literary works, works of art or sciences, including computer programs.

At the same time, according to the paragraph to the second subitem 14.1.225 of Art. 14 of the Code royalty payments for receipt of the objects of property determined in paragraph one of this Item in ownership or the order or property of person are not considered or if conditions of use of such objects of property grant the right to the user to sell or perform alienation in a different way of such object of property.

If the incurred Ltd companies of costs fall under determination of royalty, amount of royalty which the income tax payer of the company charges in the accounting period, are considered in case of determination of the taxation object according to requirements of subitem 140.1.2 of Art. 140 of the Code.

So, according to paragraph one of subitem 140.1.2 of Art. 140 of the Code the expenses (except those, which are subject to depreciation) connected with scientific and technical ensuring economic activity on invention and rationalization of economic processes, carrying out opytnoeksperimentalny and design works, production and research of the models and samples connected with the main activities of the taxpayer, costs on charge of royalty and acquisition of intangible assets (except those which are subject to depreciation) for their use in economic activity of the taxpayer are included in the expenses of such payer in full.

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