Registration and operation of NGOs and Taxation of NGOs
Registration and operation of NGOs and Taxation of NGOs


The right of association according to the Constitution of Ukraine.
The Ukrainian Constitution (accepted in 1996) explicitly proclaims and guarantees the right of association. According to the Constitution (1) citizens of Ukraine have the right to found and participate in political parties and volunteer organizations in order to execute and defend their civil rights and freedoms, and to satisfy their political, economic, social, cultural, and other interests. The only restrictions on the right of association imposed by the law are related to violations of national security and civil order, to the protection of the public health or to violation of rights and freedoms of other individuals. No citizen can be forced to join or be restricted to join any citizens' associations in terms of participation in a political party or civil association membership or non-affiliation. All citizens' associations shall be equal before the law.
Civil organizations and their activities, the program targets or actions of which are aimed at overthrowing Ukraine's independence, changing the constitutional order using violence, violating the sovereignty and territorial integrity of the country, undermining its security, unlawfully seizing power, propagandising war, violence, inciting interethnic, racial or religious animosity, encroaching on human rights and freedoms, and damaging the public health are prohibited (2). Civil organizations that have any paramilitary formations are prohibited also. Other restrictions on citizens' associations can be imposed only by the law.




A. Legal forms of NGOs            

The main legal forms of non-profit legal entities according to the Ukrainian legislation are:

  • citizen's associations, which can be:  civil organizations, trade unions, political parties;
  • charitable organizations, which can be: member charitable organization; benevolent foundation; charitable institution; other charitable organizations (foundations, missions, leagues, etc.) in accordance with the Law on Charity and Charitable Organizations.

Citizens' association is a voluntary civil union, established by people with common interests, in order to exercise and defend their civil rights and freedoms, according to the Law on Citizens' Associations. Citizens' associations can be two types - political parties or civil organizations. A civil organization is a citizens' association meant to satisfy and protect the members' lawful social, economic, creative, ethnic-cultural and other common interests (3). A specific kind of civil organization is the youth and children's civil organization, which establishment and operation are specifically regulated by the Law on Youth and Children's Civil Organisations. According to the Law on Charity and Charitable Organizations, charitable organization is a non-governmental organization meant basically to conduct charitable activities for the benefit of society and separate categories of individuals.

B. Who can register an NGO – physical or legal entities, foreigners

Civil organisation can be founded by citizens of Ukraine, foreigners, and stateless persons upon reaching 18 years while youth and children's organisations can be founded by children that are at least at the age of 15.
Legal entity (a trade company for example) can not be a founder of a citizens' association.
Citizens' associations can be founders of unions of citizens' associations. These unions are regulated in the same way as citizens' associations according to the Law on Citizens' Associations.
Charitable organisations can be founded by citizens of Ukraine, foreigners and stateless persons upon reaching 18 years, as well as by legal entities regardless of the form of ownership.
Government  authorities,  local self-administration,  state-  and communally-owned  enterprises,  institutions,  and  organisations   of Ukraine  being  sustained  by the budget  shall  not  be  eligible  as founders of charitable institutions.
Regarding the legal possibility for foreigners to be founders of civil or charitable organizations, usually state authorities responsible for the registration of those civil organizations deny the possibility for foreigners to be founders of NGOs, but only to participate in it. The legal argument is article 16 of the Ukrainian Law on Legal Status for Foreigners, according to which foreigners and stateless people, who permanently reside in Ukraine, have the right to join legal civil organizations on an equal base with the Ukrainian citizens, if different is not provided by the Ukrainian laws, or by the statutory documents of the organizations themselves (4).

C. Is there a minimum capital requirement

There are no requirements for minimum capital for the establishment of NGOs according to the Ukrainian legislation.

D. Is there a minimum requirement for number of founders/members


According to the Ukrainian legislation, there is a requirement for minimum 3 founders (physical persons) for the establishment of civil organizations. The registration form can be signed by the founders personally or by their legal representatives. Unlike civil organisations, charitable organizations can be founded by at least one founder – physical person or legal entity. In this case the  registration form  also can be signed by founder(s)'s legal representative(s). In all cases all the signatures must be notarized.

Ukrainian legislation generally does not provide any additional requirements for number of members of civil or charitable organizations, but still there are some exceptions for youth and children's civil organizations. For example only individuals at the age of 14 to 35 years can be individual members of youth civil organizations (5), while in children civil organization members can be only individuals at the age of 6 to 18 years. Elder people may be members of youth and children civil organizations if only their number does not exceed one third of the total membership in such organizations. Another requirement is that the number of elder members in the elected bodies of these organizations can not be over 1/3 of all members of the relevant bodies. These restrictions on number of members in the elected bodies, who are over 35 and 18 years respectively, shall not apply to associations of youth and children civil organizations.

Where are NGO registered – in court, in a ministry

The registration procedure of civil and charitable organizations is regulated by several laws: the Law on Citizens' Associations, the Law on Charity and Charitable Organizations, and the Law on State Registration of Legal Entities and Sole Traders that entered into force in 2004. According to these laws, there are two procedures that have to be completed in order to establish civil or charitable organization:

  • legalization of the NGO as a specific type of non-profit organization (civil or charitable organization). The competent authorities are the Ministry of Justice or local executive authorities;
  • registration of the specific type of NGO as a legal entity. The competent authority is the State Registrar according to the location of the NGO, which can be only done by the executive committee of the City council or state administration (6).

Besides this general registration rule, there are some differences in the registration procedures of civil and charitable organizations.

Civil organizations

According to article 14 of the law on Citizens' Associations a civil organisation is legalised by the Ministry of Justice of Ukraine or by local executive authorities, executive committees of village, township, and city councils of people's deputies, as the case may be. Every NGO according to its status (international, all-Ukrainian or local) have to be registered in the respective state body. If a citizens' association operates in two or more administrative units, it is legalised by the pertinent superior authority.
Local branches/offices of duly registered all-Ukraine and international citizens' associations are subject to compulsory registration with local executive authorities, executive committees of village, township, and city councils of people's deputies (as the case may be).
Charitable organizations
Under the law on Charity and Charitable organizations official   registration of all-Ukrainian   and   international charitable organizations shall be carried out by the Ministry of Justice of Ukraine, and of local charitable institutions, as well as offices (branches, representations) of all-Ukrainian and international charitable institutions - by the relevant local executive authorities.


Although there is a legal regulation on the exchange of information between the Ministry of Justice and state registrars, adopted in 2007, this regulation is not applied on practice by the state authorities. The reason for this is the absence of cooperation between the Ministry of Justice (or its local branches) and local executive authorities. Moreover, under the Law on State Registration of Legal Entities and Sole Traders executive committees of city councils in cities with regional status have the obligation to register legal entities, so that the two registration procedures for local civil organizations are carried by one and the same state institution. The state authorities do not usually follow this requirement either (7).

  1. Grounds for refusal of registration and grounds for termination of registration.

The general rule for refusal of registration of NGO is a conflict with the requirements of the Ukrainian legislation, but still there are some differences in determination of these grounds.
A civil organization can be denied registration if the name, statutory or other documents submitted for registration of the organization are violating any of the laws of Ukraine. Furthermore, the state decision for denying registration must explain the reasons for the denial.
A Charitable Organization can be denied registration if:

  • there are transgressions  of  any  of  the  procedures  for establishment   of charitable  organisations provided by the law or any other normative documents  , or
  • there is another charitable  organization, established under the same name.

The case when the legal address of a charitable organization is the same as the address (place of residence) of a natural person, can not be a ground for refusal of official registration.   
The act for refusal of registration of civil or charitable organisations can be appealed before the court.
The registration authority can also cancel an official decision on the registration of a charitable organisation if such authority finds any of the statutory documents to have been falsified.
Citizens' associations shall not be legalized at all and those already legalized shall be banned by the court if they aim at:

  • forcefully changing the constitutional order and territorial integrity of Ukraine in any unlawful manner;
  • undermining national security by acting for the benefit of any foreign countries;
  • propagandizing war, violence or cruelty, Nazism and neo-Nazism;
  • fomenting ethnic and religious enmity;
  • forming unlawful military units;
  • restricting universally recognized human rights.

There can be only two results of application procedure: state registration of NGO or refusal of such registration. The law does not regulate any possibility of termination of registration. But in fact, there are many 'legal' reasons for having the application documents returned. An absence of telephone number in statute or a name of executive body of NGO different from the name, determined in the law, can be a reason for state bodies to return the documents back. Therefore all the application documents must strictly follow the legal provisions.

  1. Structure of the NGOs.

The Ukrainian Civil Code determines a minimum legal framework for structure of non-profit organizations including civil and charitable organizations. Besides this there are additional legal requirements for the structure of an NGO in the special laws on NGOs.
According to the Civil Code there is a minimum two-level system of management:

  • the  highest  management body is a general meeting for a membership-based legal entity, and a supervisory  council - for an institution;
  • executive body - the board (committee).

   Civil organizations

Taking into account that the law on Citizens' Associations does not include full information on a civil organizations' management, and whereas it gives some freedom to form a structure of civil organizations, and considering a minimum two-level system of management under the Civil Code, there is a common practice for a civil organization to have a three-level management structure:

  • the  highest  management body is a general meeting, whose competence include approval of the statute (articles), changes   therein,   election   of  other bodies, determination of priorities of a civil organization;
  • a collective body, who manages between the general meetings, - a board or a council;
  • a head of a civil organization – a head of the board or a president.

Furthermore there is usually an audit commission who is responsible for controlling whether the civil organization uses its money appropriately.

   Charitable organizations

The law on Charity and Charitable Organizations clearly determines the whole structure of a charitable organization. The highest management body of any charitable organization shall be collective (e.g., general meeting, convention, conference), executes  its authority in accordance with the statute of this charitable organization. Its  competence shall include approval of the statute, changes   therein,   election   of the  executive   and   supervisory authorities, adoption of charity programs, determination of priorities and guidelines, decisions on reorganisation and liquidation, and other matters  envisaged  by  the  statute  of  the  charitable organization. The board (committee) shall be the executive body of a charitable organization. Its jurisdiction shall be determined by the statute. Daily management shall be entrusted to an administrative-executive body headed by the president (director / general manager) and its competence shall be determined by the statute of a charitable organization.
Regulatory  and  controlling  powers  shall  be  vested  in  the supervisory  council  whose membership shall  be  determined  by  the founder(s).

  1. Is there a public benefit status in your country?

There is no current legislation on a public benefit status of NGOs in Ukraine. But in 2002 a draft law on Non-commercial Organizations initiated by deputies of the Parliament was considered at the session of Verkhovna Rada but was not adopted as a law.

  1. Reporting requirements and oversight authorities – who is responsible for monitoring NGO activity?

According to Ukrainian law there are three main forms of state supervision and control:

  • monitoring whether the NGOs are following their statutory requirements by the Ministry of Justice and its local bodies;
  • monitoring whether the NGOs are following the law by the prosecutor's office;
  • monitoring an accurate and timely finance reporting of NGOs by the fiscal authorities and the State Tax Administration.

The authorities legalising citizens' associations shall monitor their observance of the statutory requirements. Representatives of these authorities shall be entitled to attend the events organised by citizens' associations, request and receive the required documents and explanations (8). Practically legalising authorities, especially their local bodies, ask all registered legal organizations to send a report about their activity annually. Whereas this request is not formally mentioned in the law and does not have a strict form, it used to be a prevention measure for regulation of possible problems with the authorities (9).
Fiscal authorities and the State Tax Administration shall monitor finance sources, receipts, and tax payments of NGOs. NGOs have to report to the State Tax Administration monthly, quarterly and annually within the procedures determined by law. These reports must be given even in case when NGO does not deal with any financial issues. NGO which does not submit a report in time or at all, or submit a failure report, will be sanctioned with one of the following sanctions: warning, fine, suspension of certain or the whole activities, liquidation (10).
In addition NGOs have to report to:

  • Pension Fund – monthly;
  • Obligatory State Social Insurance Fund in case of unemployment – quarterly;
  • Social Insurance Fund against accidents at work and occupational diseases – quarterly;
  • Social Insurance Fund for temporary disability – quarterly.

All these institutions can sanction NGOs in case of violation of the reporting procedure.

  1. Possibility for direct economic activity

Ukrainian legislation determines the possibility for direct economic activity for civil and charitable organizations in different ways. The general rule according to Civil code of Ukraine proclaims that all non-commercial companies, citizens' associations in particular, and institutions can conduct additional direct economic activity besides its main activity, if such meets the purpose for which they were created, and contributes to its achievement, and is not contrary to the law.

   Civil organizations

According to the Law on Citizens' Associations civil organizations can conduct business and other commercial activities by setting up self-accounting institutions and organizations that are legal entities, and establish enterprises, in order to fulfill statutory tasks and objectives (11). This law does not provide another opportunity to perform economic activities.

   Charitable organizations

The charitable organization is entitled to a non-profit business, aiming to fulfill its statutory objectives. In addition, charitable organizations can provide certain services (works), if such provision needs special certification or licensing, is allowed after such certification or licensing (12).
The Law on Charity and Charitable Organizations also allows each charitable organization to conduct business aimed at reaching its statutory goals. Besides, charitable organization is independent in resolving business matters, determining wages for the office staff, using funds and other tangible assets in accordance with the laws of Ukraine. But there is one limitation, according to which the amount spent to sustain a charitable organization can not exceed 20% of its budget in the current year.
Charitable organization's financial activities must be conducted according to the laws of Ukraine. Such activities aimed at achieving charitable goals are not qualified as business or other profit-making activity. Proceeds from the financial activities of a charitable organization must be invested exclusively in charity projects, following the procedures established by the law.

  1. Possibility to register a commercial company

In order to conduct their activities, fulfill statutory tasks and objectives, both civil and charitable organizations can establish enterprises. Such enterprises must keep books and records, file statistical reports, get registered with bodies of the State Tax Administration, and make pay taxes in accordance with the current legislation. The revenue from enterprises founded and owned by civil and charitable organizations is included into the property of such organizations.

L. Possibilities to engage in political/public policy activity
Civil organizations are actively engaged in political and public life in Ukraine. In order fulfill statutory tasks, duly registered citizens' associations have the right to:

  • take part in political activities, organize mass events (meetings, rallies, demonstrations, etc.);
  • submit proposals to state authorities and administrative agencies;
  • take part in developing draft decisions on gender equality issues that are adopted by executive agencies and local self-government bodies;
  • delegate their representatives to consultative and advisory agencies in charge of the provision of equal rights and opportunities for women and men that are established under executive agencies and local self-government bodies;
  • perform monitoring of the provision of equal rights and opportunities to women and men.




After registration in the State Tax Administration of NGOs as a taxpayer NGO must pay all the taxes on a general basis. To obtain the status of a non-profit organization NGO must undergo a separate procedure for being included in the Register of non-profit organizations in the STA. To complete this procedure NGOs must submit an application and a copy of the statute and founding documents. Then the STA considers the application and make a decision on inclusion in the Register of non-profit organizations and provide appropriate status or refusal to grant the status of non-profit organization to an NGO. If an NGO does not receive the status of non-profit organization, it is not entitled to benefits and paying taxes as the other entities.

Is NGO income taxed? Is there tax on grants?


According to Ukrainian legislation all entities, including NGOs, have to pay income tax. The tax rate is 25% of taxable income. However, the law On company income tax determines which types of NGOs' revenues are exempt from income tax. The main condition of tax exemption for NGOs is the fact that revenues of NGOs can not be allocated among their founders, participants or members, and nor can these revenues be used for the benefit of any separate founder, participant or member thereof, including executives (except in the form of wages and deductions for social facilities). In the event of liquidation, NGO's assets are transferred to another relevant non-profit organization or remitted to the budget. Therefore, NGOs do not pay income tax from following revenue sources:

  • funds or property received free of charge or as grants or voluntary donations: if granted goods exempt from tax as a charitable or humanitarian aid were not used on purpose or not for charity, they are considered to be income and are taxed at the general rules. It is also important that the gross revenues include proceeds from sales (swap, other types of alienation) of fixed or intangible assets subject to amortization. Although donated assets are not subject to amortization, the gross expenditure of NGOs includes positive difference between the selling price and the carrying value of assets that are not subject to amortization.
  • passive incomes: passive incomes include revenues received as interest, dividends, insurance benefits and indemnities, as well as royalties. Payments for operating or financial lease (leasing) are not considered as interests, so they are taxed on general grounds. However, income from operating lease (leasing) is exempt not only from value added tax, but also from income tax in case it is provided that these payments do not exceed the amount of amortization charges and insurance premiums on the value of the property. Furthermore payment of royalties is referred to gross costs regardless whether or not they serve to increase the taxpayer's revenues. In the case an NGO receives insurance recoveries, such as related to property insurance, these sums are tax exempt if they are used with the purpose to recover the property.
  • funds or property received by such NGOs as a result of their principal activities:  principal activities can be activities of NGO involving the provision of the charitable aid, the educational, cultural, scientific, educational and other similar services for the public consumption, as well as the establishment of the systems of the social self-protection of individuals (non-state pension funds, credit unions, and other similar organisations). The principal activities also include the sale of goods (services) by NGO, if they promote the principles and ideas, for whose protection such NGO was established, and which are closely linked to its principal activities, provided that the price for such goods (services) is lower than usual or if such a price is regulated by the state.
  • grants or subsidies obtained from the state or local budgets, state special-purpose funds or within the scope of the charitable aid, including the humanitarian aid or technical assistance provided to such not-for-profit organisations according to terms and conditions of international treaties accepted as binding by the Parliament of Ukraine. The exception from this point are the grants for regulating the prices for paid services provided to such not-for-profit organisations or via them to the recipients according to the legislation, in order to reduce the level of such prices.
  • Is there a tax on the NGO's economic activity income?

As some NGOs are engaged in economic activities only after they create an enterprise we must take into account the fact that such enterprises are not exempt from income tax. The only exception can be enterprises of civil organizations of disabled people, whose revenues are tax exempt when 50% of their employees are disabled people and their wages must be at least 25% of total company's expenses. Other enterprises established by NGOs do not have any exemptions from income taxation.
In cases NGO conducts additional direct economic activity and/or receives revenues from sources other than indicated in §ait is under the obligation to pay the income tax on a revenue identified as the sum total of incomes received from such other sources, reduced by the amount of expenses involved in receiving these incomes, provided it does not exceed the total amount of these incomes.

  • Is there a tax on donations?

In general voluntary donations are tax exempt under the law on Company income tax. See §a.

  • Are there exemptions for donors of NGOs (both physical or legal)?

According to Ukrainian legislation, legal entities have determined tax benefits from donating NGOs. Donors, whose donations to NGO during the year exceed 2% but not more than 5% of their income for the previous financial year, may include such amount in its gross expenditure. Thus donors are exempt from paying income tax on such parts of their income. Alternative tax base for contributions of corporate donors to NGOs, which would be included in the gross expenditure, does not exist. Setting limits in a minimum amount of money as a small maximum limit does not stimulate the Ukrainian corporate donors give their money to NGOs.
This approach also applies to individual donors, but with a clearly discriminatory term - a tax credit for donations to an NGO may not exceed the amount received by an individual as wages. Therefore the law provides for the right to a tax credit for individual donors to NGOs, but in fact, the rule restricts individual donors to support two additional requirements:

  • minimum total donations must exceed 2% but not more than 5% of total taxed income;
  • a special limit the total tax credit amount of wages received during the year, which eliminates the right to a tax credit for individuals who do not receive this kind of income.
  • Is there a tax on income from passive investments (interest on deposits, dividends, etc)?

In general income from passive investments is tax exempt under the law on Company income tax. See §a.

  • Are there taxes on the property owned by NGOs?

Ukrainian legislation provides property taxes for every legal entity, but of course there are some special provision for NGOs. One of the main direct taxes on the NGO's property is a fee for use of land regulated by the Law on Payment for land.  According to the law there is still a large number of NGOs which are exempt from paying this fee. This number includes following types of NGO:

  • registered charitable organizations, which do not conduct any economic activity;
  • civil organizations with sport orientation for land, which contains sports facilities, which are used for national and international competition and educational-training process of Ukrainian teams;
  • civil organizations of disabled people and their enterprises and organizations, if they receive a permission from the Interdepartmental Committee on the activities of enterprises and organizations of civil organizations of persons with disabilities. 

Another tax is a tax on vehicles owned by NGOs. The law does not provide any exemptions for NGOs to tax on owners of vehicles. This tax is charged with differential rates depending on the engine displacement of the vehicle.
Taxation of other property other than land and vehicles remains unresolved. Fee for municipal or public real estate in Ukraine also is one of the types of a required payment. The minimum rates of payment are determined for the civil and charitable organizations. But it is undermining the motivation of state agencies and local governments to transfer the property to NGOs, many of whom have lost their right to use offices (13).

  • Is there an inheritance tax on property inherited by an NGO?

In Ukraine there is no separated inheritance tax for legal entities. If an NGO inherits some property from any physical person, such property will be included into its income and taxed in general rules with a tax rate 25% of total taxable income. 

  • Is there any limitation on foreign funding (e.g. there needs to be a preliminary approval of the state, it can be only a certain percentage of your total income, etc.)

Under Ukrainian legislation there is no limitation on foreign funding, so any NGO can receive donations from foreign donors following legal procedures under the law.

  • Are there any exemptions from VAT for NGOs?

VAT in Ukraine based on the extreme approaches: either the total rate of 20% or exemption from VAT, directly or indirectly associated with the status of the payer or source of income. The minimum amount of taxable income that requires registration as the VAT payer in Ukraine, is 300 000 UAH, which is approximately equal to 30 000 EUR. The main problem for Ukrainian NGOs is the refund VAT charges paid by them when obtaining goods and services, even if NGOs are VAT payers.
Law on Value Added Tax exempt certain transactions from VAT, some of these operations may be the main activity of NGOs. These include: educational services for children, supply of goods intended for the disabled people, the implementation of medical products, provision of health services and others. Under this law providing charitable assistance, the gratuitous transfer of goods and services to public and charitable organizations in particular, is also exempted from VAT. But we must take into account two important conditions: the goods and services should be provided for their immediate use in charitable purposes or transferred to charity purchasers. Import property as technical, charitable and humanitarian assistance is also exempt from VAT.
Public organizations of disabled people are the separate group of subjects exempt from VAT, to which the special conditions and benefits apply.
However, the exemption for NGOs has several negative consequences. Firstly, they are not entitled to receive tax credit for the amount of VAT paid in stock prices for purchased goods and services. Second, the independent sale of goods or services is complicated by the fact that buyers paying VAT and can not include these costs to their own tax credit. Finally, the state does not use such a market mechanism of financing NGOs, as refund of VAT on socially useful goods and services (books, health products, educational or social services), which are subject for reduced or zero rate of VAT (13).


1. The Constitution of Ukraine, art. 36
2. The Constitution of Ukraine, art. 37
3. The Law on Citizens' Associations, art. 3
4. State registration of public organizations, religious organizations, trade unions, charitable organizations in Ukraine: from A to Z. / Foreword TG Yatskiv: Manual. - Lviv: Law. - 2008. - P. 286.
5. The Law on Youth and Children's Civil Organizations, art. 5
6. The Law on State Registration of Legal Entities and Sole Traders, art. 5
7. State registration of public organizations, religious organizations, trade unions, charitable organizations in Ukraine: from A to Z. / Foreword TG Yatskiv: Manual. - Lviv: Law. - 2008. - P. 286.
8. The Law on Citizens' Associations, art. 25
9. Handbook for NGOs / Edited by A. Tkachuk - 2 edition, tested and enlarged, adapted to the Ukrainian legislation dated 1.08.2005.
10. The Law on Citizens' Associations, art. 28
11. The Law on Citizens' Associations, art. 24
12. The Law on Charity and Charitable Institutions, art. 16
13. Handbook for NGOs / Edited by A. Tkachuk - 2 edition, tested and enlarged, adapted to the Ukrainian legislation dated 1.08.2005.

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