Ukraine plans to exempt volunteer insurance from taxation. This will help to attract large international funds and insure more volunteers

September 14, 2023

On September 13, 2023, the Verkhovna Rada of Ukraine registered the Draft Law of Ukraine No. 10040 “On Amendments to the Tax Code of Ukraine regarding the support of volunteer activities under martial law”. 

The document will exempt from personal income tax and military levy the expenses of public associations and charitable organizations, other non-profit organizations related to insurance of life and health of volunteers for the period of their volunteer activities.  Now these taxes are mandatory, even when it comes to volunteers.

Such changes are one of the steps towards the European standard of organizing volunteering in Ukraine. They will define the conditions for minimum social guarantees for volunteers – who could potentially be affected in any corner of Ukraine where they provide assistance.

“This is a very important initiative, which in the near future, if adopted, will allow us to launch large projects on life insurance for volunteers in the eastern and southern regions of Ukraine. We are rooting for the adoption of this draft law,” commented Nataliia Povtar, lawyer at the Centre for Democracy and Rule of Law.

The expert notes that now the provisions of tax legislation in Ukraine as a whole do not correspond to the world practice of regulating the volunteer sphere. This is one of the main reasons why Ukraine lacks the practice of life and health insurance of volunteers of non-profit organizations and institutions. 

International experience of insurance for volunteers indicates that such insurance is necessary, along with the easing of taxation conditions. International non-governmental organizations, such as the Swiss Agency for Development and Cooperation, the UN Office for the Coordination of Humanitarian Affairs, are ready to support projects on insurance of life and health of volunteers and note the relevance of changes to the tax legislation,” says the explanatory note to the draft law.

The need for such changes was also noted earlier by NGOs in the updated version of Section 5 “Development of Volunteer Activity” of the Legal Reforms Roadmap for Civil Society in Ukraine.

The draft law was registered by MP Olena Shuliak in co-authorship with almost 60 MPs.

The document was developed by lawyers of NGOs as part of the project Ukraine Civil Society Sectoral Support Activity, which is implemented by the Initiative Center to Support Social Action “Ednannia” in consortium with the Ukrainian Center for Independent Political Research and the Centre for Democracy and Rule of Law thanks to the sincere support of the American people provided through USAID – US Agency for International Development.

As a reminder, the current provisions of the Tax Code of Ukraine stipulate that if a non-profit organization or institution engages volunteers, such an organization is a tax agent for the purpose of personal income tax when providing the volunteer with income in the form of the cost of an insurance policy, and is obliged to accrue, withhold and pay personal income tax and military levy to the budget from such “income” of the volunteer.

Centre for Democracy and Rule of Law