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ACCOUNTING FEATURES OF CHARITABLE ORGANIZATIONS

Since the beginning of the legal regime of martial law in Ukraine on February 24, the volunteer movement has regained its strength and earned the largest scale in the history of Ukraine. Along with this, the very name “volunteer” is not enough. To carry out volunteering, by analogy with entrepreneurship, you need to have a certain shell for work. This kind of shell can serve as a kind of charity. So let’s understand what are its features and benefits.

With regard to regulations, this issue should be guided by the provisions of the Law of Ukraine “On Charitable Activities and Charitable Organizations”. A charitable organization can be created in three different forms, which aim at related things, but have certain features:

  • a charitable society;
  • a charitable institution;
  • a charitable foundation.

First of all, we would like to note that volunteering is primarily aimed at raising funds in order to further spend them on needs, in particular, the military. However, where there are funds, there is control by the state, in particular the tax authorities. So what’s the nuance?

The peculiarity is that if you raise funds as an individual, then you will have a tax liability in the form of 18% personal income tax and 1.5% military tax. In addition, without official registration, questions may arise in banking institutions: provide statements, checks, acts, other documents to confirm that you are a volunteer. This is because no one has canceled the financial monitoring.

So let’s focus on the following features of charitable organizations:

  • A sign of non-profitability, ie its purpose is not to make a profit.
  • Impossibility to make cash payments.
  • Ability to make expenses for their own activities (wages, property, etc.) that do not exceed 20% of all revenues.
  • The most common NACE is 88.99 Provision of other social assistance without accommodation, n.v.i.u.
  • Sources of funding can be funds received from both individuals and legal entities.
  • Funds should be credited exclusively to current accounts opened with banking institutions.
  • Charities do not pay any taxes other than payroll taxes.
  • Charitable organizations must keep all primary documents to prove their own expenses.
  • The charitable organization must keep records of income and expenses according to accounting rules and submit reports.

We can say that charitable activities are necessary in modern conditions. In addition, it should be carried out only within the limits set by current legislation.

Therefore, if you have additional questions on this topic or the topic of accounting, contact the specialists of the law firm “Prikhodko&Partners”, we will be happy to help you and provide a comprehensive answer.

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