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 The basis for the lease payment is the lease agreement of the land plot, which specifies the size and terms of payment. It should be noted that the lease in this case is of an administrative nature. Since the landlord is an executive or local self-government body, there is no need to speak about freedom to establish contractual terms.

 The Law “On Land Lease” contains a stipulation that the terms of rent payment when renting municipal or state land are determined by tax law (Article 21). The PKU sets the lower and upper limits of the land rent. Thus, the amount of the annual payment is set by the lease agreement, however, the amount of the lease cannot be:

  •  Less than the surplus tax in the amount of: for land plots, the regulatory assessment of which is not more than 3% of the valuation, for public lands – not more than 1% of the valuation, for agricultural land – not less than 0.3% and not more than 1 % estimate; for land parcels that have not been assessed – not more than 5% of the normative monetary valuation of arable land unit in the Autonomous Republic of Crimea or by region, for agricultural lands – not less than 0.3 percent and not more than 5 percent of the normative monetary valuation arable area units in the Autonomous Republic of Crimea or by region “
  • Must not exceed 12% of regulatory monetary valuation

 However, the excess rent is in any case allowed if there are several applicants for land and the tenant is determined on a competitive basis. If the lease does not prohibit the subletting of land, then, regardless of the direct indication in the contract, the lease payment may not exceed the amount of the lease itself.

 Therefore, the law does not allow to receive income from the sublease of state or communal property (land). From the above it follows that in determining the amount of land tax and rent as a tax base in many cases acts regulatory monetary valuation of land (Article 289 of the CCU). It does not remain unchanged from year to year, but is adjusted in accordance with the indexation coefficient obtained on the basis of the consumer price index for the previous year as of January 1 of the current year. The indexation coefficient is charged to the central executive body for land resources (the State Agency for Land Resources).

Author: Nikolay Baranovskiy

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