KIEV: The Constitutional Court of Ukraine (CCU) has ruled that the taxation of pensions in Ukraine is unconstitutional. “The Constitutional Court of Ukraine has ruled to recognize the provision in subparagraph 164.2.19 of paragraph 164.2 of Article 164 of the Tax Code of Ukraine, which stipulates that the total monthly (annual) taxable income of the taxpayer includes the amounts of pensions (including the amount of their indexation accrued in accordance with the law) or a monthly lifetime allowance, is not in accordance with the Constitution of Ukraine,” the court reported on its website. According to the court decision, the approach of the legislator should be recognized as fair in the sphere of pensions, which provides a proportional ratio between insurance contributions and the assigned amount of pension payments, and the insured persons can freely exercise their right to a pension in full.
Ukrainian lawmakers asked the CCU to examine if the provisions of the law “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine Regarding Tax Reform” and the Tax Code of Ukraine regarding the taxation of pensions and monthly lifetime allowance are in line with the Constitution of Ukraine. The law on pension reform was adopted by the Verkhovna Rada on October 3 and entered into force on October 11, 2017.
