Obtaining non-profit organization status in Ukraine is an important step for public, charitable, and other institutions whose activities are not aimed at generating profit. This status allows entities to be exempt from corporate income tax; however, it requires strict compliance with tax legislation and proper accounting practices.
According to Article 133 of the Tax Code of Ukraine, only those organizations that meet the established criteria and are included in the Register of Non-Profit Institutions and Organizations may qualify as non-profits.
Who can obtain non-profit status
Non-profit organizations may include budgetary institutions, public associations, charitable and religious organizations, homeowners’ associations (HOAs), cooperatives, trade unions, associations of legal entities, and other organizations whose activities comply with legal requirements.
Key requirements for inclusion in the register
To obtain non-profit status, an organization must:
- Be established and registered in accordance with applicable legislation;
- Include in its founding documents a prohibition on the distribution of profits among founders, participants, and employees;
- Provide for the transfer of assets, in the event of liquidation, to other non-profit organizations or to the state budget (with certain exceptions);
- Be included in the Register of Non-Profit Institutions and Organizations by the regulatory authority.
It is important that the income of such organizations may be used exclusively to finance activities defined in their founding documents.
How to submit documents
To be included in the Register, an application in Form 1-RN and copies of the founding documents must be submitted using one of the following methods: online via the taxpayer’s electronic cabinet, by mail, in person, or through a state registrar during registration procedures.
The regulatory authority reviews the documents within three business days and decides whether to include the organization in the Register or to refuse the application.
Practical aspects and risks
In practice, obtaining and maintaining non-profit status involves a number of risks. The most common include non-compliance of founding documents with the Tax Code requirements, improper use of income, and errors in accounting and tax reporting.
Additionally, under martial law, specific rules apply to the use of income by non-profit organizations, requiring increased attention from management.
Independent audit of financial statements plays a key role in this process, increasing the level of trust among donors, grant providers, and other stakeholders, and helping to identify and mitigate financial and regulatory risks in a timely manner.
Kreston Ukraine practice
Kreston Ukraine has extensive experience working with non-profit organizations, including charitable foundations, public associations, and international technical assistance projects. The team is regularly engaged in conducting independent audits of financial statements in accordance with international standards, including within donor- and grant-funded programs.
Kreston Ukraine provides comprehensive support, including:
- analysis of compliance of founding documents with legal requirements;
- advisory services on obtaining and maintaining non-profit status;
- organization and transformation of accounting processes;
- preparation for tax audits, conducting independent financial statement audits in accordance with ISA, and providing recommendations to enhance transparency and financial management efficiency.
Experience in international projects, including audits of grant funding, confirms Kreston Ukraine’s expertise in transparency, accountability, and effective financial management of non-profit organizations.
FAQ
What is a non-profit organization?
A non-profit organization is a legal entity that does not aim to generate profit and complies with the requirements of the Tax Code of Ukraine regarding the use of income.
Who can obtain non-profit status?
Public, charitable, religious organizations, homeowners’ associations, cooperatives, trade unions, and other legal entities that meet legal requirements.
What are the main requirements for obtaining the status?
Relevant provisions in the charter, prohibition of profit distribution, transfer of assets upon liquidation, and inclusion in the Register.
Why can inclusion in the Register be denied?
Due to non-compliance of founding documents with legal requirements or submission of an incomplete set of documents.
Is it necessary to pay corporate income tax?
No, provided that all non-profit criteria are met and income is used for its intended purposes.
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This material was prepared by specialists of Kreston Ukraine, an international audit and consulting firm specializing in tax consulting, accounting, and tax audit support.
The information is based on current Ukrainian legislation and practical experience working with non-profit organizations, including participation in international projects and financial statement audits.
Planning to obtain or confirm non-profit status?
Contact Kreston Ukraine for comprehensive support, including audit, tax consulting, and ongoing support, and minimize regulatory and tax risks.
