The Supreme Court, acting as a panel of judges of the Cassation Administrative Court, in its Ruling dated February 5, 2025, in case No. 500/6132/23 concerning the recognition as unlawful and annulment of tax notices-decisions on the payment of real estate tax by the owner of agricultural buildings, part of the roofs of which were lent for the installation of solar panels to another person, reached the following conclusions:
…According to paragraph 30.1 of Article 30 of the Tax Code of Ukraine, a tax benefit is the exemption of a taxpayer from the obligation to calculate and pay tax or duty as provided by tax and customs legislation, or payment of such tax or duty in a reduced amount, provided the conditions defined in paragraph 30.2 of this Article are met.
Subparagraph “zh” of subparagraph 266.2.2 of paragraph 266.2 of Article 266 of the Tax Code of Ukraine provides that buildings and structures of agricultural producers (legal entities and individuals), classified as “Buildings for agriculture, forestry and fishery” (code 1271) according to the State Classifier of Buildings and Structures DK 018-2000, and not leased, lent, or transferred under financial leasing by their owners, are not subject to taxation.
Thus, a structure (building) is not subject to real estate tax (other than land) if the following cumulative conditions are met:
- such non-residential building is classified under “Buildings for agriculture, forestry and fishery” (code 1271) of the State Classifier of Buildings and Structures DK 018-2000;
- the owner of such building (legal entity or individual) is an agricultural producer;
- such non-residential building is not leased, lent, or transferred under financial leasing by its owner.
This legal interpretation is consistent with the legal position of the Supreme Court expressed, in particular, in the ruling dated May 21, 2024, in case No. 600/5153/23-a.
⭕️ Regarding the transfer by the claimant to an individual entrepreneur (the user under the loan-for-use agreement) of part of the greenhouse roof, with an area of 2,944.5 sq.m, for free use (commodatum), including for the placement of solar panels, it should be noted that under the wording of subparagraph “zh” of subparagraph 266.2.2 of paragraph 266.2 of Article 266 of the Tax Code of Ukraine, the objects not subject to taxation are specifically buildings and structures of agricultural producers (legal entities and individuals), classified under “Buildings for agriculture, forestry and fishery” (code 1271) of the State Classifier of Buildings and Structures DK 018-2000, which are not leased, lent, or transferred under financial leasing by their owners.
In other words, when granting a real estate tax exemption, the legislator established as a condition the non-transfer of the building in its entirety under lease, lending, or financial leasing.
In the disputed case, the courts established, and the controlling authority did not contest, that the individual entrepreneur (owner) directly uses the greenhouses in their business (as an agricultural producer growing flowers), and thus qualifies for the tax benefit. At the same time, solar panels were installed on the roofs of some greenhouses by another individual entrepreneur (the user under the loan-for-use agreement), who received those roofs for free use.
⭕️ The subject of the loan agreement concluded between the claimant and the individual entrepreneur (the user under the loan-for-use agreement) is not the buildings and/or structures themselves (the greenhouses), but only the roofs of such buildings (structures). Therefore, taking into account the conditions for granting the benefit defined in subparagraph “zh” of subparagraph 266.2.2 of paragraph 266.2 of Article 266 of the Tax Code of Ukraine (the benefit applies specifically to a building not transferred under lease), the courts correctly concluded that the existing loan agreement does not provide grounds for assessing the real estate tax (other than land) on the individual entrepreneur (owner of the property), which is payable by individuals who own non-residential real estate, for the area of premises whose roofs were lent for use.
Discussion of court practice regarding real estate and land law is available in the group Urban Planning in Ukraine.
Yuriy Brykaylo, attorney
Ⓒ 2025