New business registration, new tax risks: how a registered address can cost tax benefits

Since 27 October 2026, when a legal entity is created or changes its address, the state registrar in Ukraine must check whether there is a lawful basis for using the premises at that address.

The aim is clear: fewer fictitious addresses. But the documents now required also show who owns the premises and how the owner uses them. And that can affect the owner’s taxes.

This matters most for owners of flats and houses who let their address be used to register a company. In some cases they may lose the property tax benefit and face additional tax assessments.

What changed on 27 October 2026

On 14 October 2026 the Verkhovna Rada adopted Law No. 5020-IX “On Property Valuation”. Despite its title, it also amended Law No. 755-IV on State Registration of Legal Entities, Individual Entrepreneurs and Public Associations. The amendments have applied since 27 October 2026.

The registrar now checks (part 8 of Article 6 of Law No. 755-IV):

• when a legal entity is created — whether the founder, or one of the founders, has a lawful basis to use the premises at the stated address;
• when the registered address changes — whether the legal entity itself has such a basis.

This is established from the State Register of Real Property Rights (DRRP) and the documents required by law. The rules do not apply to state authorities and local self-government bodies.

The Ministry of Justice explained how to apply the new rules in its letter of 29.10.2026 No. 163782/8.4.3/32-26.

The rules cover only two registration actions: creating a legal entity and changing its address. The law does not oblige companies already registered to confirm their current address.

When a lease is required

It depends on the basis on which the company uses the premises.

If the founder or the company holds ownership or another property right registered in the DRRP, the registrar checks it in the register.

If the basis is a lease (sublease) or a loan-for-use agreement that does not require notarisation, the application must include an original copy or a notarised copy of the agreement (item 20 of part 1 and item 17 of part 4 of Article 17 of Law No. 755-IV). The registrar also checks in the DRRP that the premises are owned by the lessor (lender).

So the owner needs to make sure their ownership is recorded in the DRRP.

Older property is harder. If ownership arose long ago and was never transferred to the electronic register, the old title document remains valid. But without DRRP records the registrar may be unable to establish the basis of use, and under item 13-1 of part 1 of Article 28 of Law No. 755-IV that is a ground for refusing registration. The right will first have to be registered in the DRRP.

How the address becomes a source of information for the tax authority

Previously, a registered address could be stated without checking whether the company had the right to use the premises. Now the check is required by law, and the agreement goes into the registration file.

Example. A company is registered in a flat owned by an individual, and a lease or loan-for-use agreement is signed for that purpose. The agreement shows that housing has been handed over to a legal entity. The tax authority may use it when checking the owner’s tax obligations.

The new law does not introduce a separate tax on registered addresses. Nor does it automatically assess additional tax on every owner whose premises host a company. It simply makes it easier to identify circumstances that already have tax consequences under the Tax Code.

How a flat owner can lose the property tax benefit

Under subpara. 266.4.1 of the Tax Code of Ukraine, the tax base for an individual’s residential property is reduced:

• for a flat or flats — by 60 sq. m;
• for a house or houses — by 120 sq. m;
• if the owner has both — by 180 sq. m.

However, subpara. 266.4.3 provides that the benefits do not apply to property that owners use to earn income: property that is leased, lent for use or used in business activities.

Alongside leases, the list names loans for use, that is, use free of charge. So handing a flat to a company for free does not guarantee keeping the benefit. The outcome depends on the agreement’s terms, how the property is actually used and other circumstances.

Is a registered address alone enough to lose the benefit?

This needs careful analysis.

If the flat is only recorded as the company’s address but was never handed over for use and earned no income, the entry in the Unified State Register alone should not automatically count as proof of commercial use.

It is different when the owner has signed a lease or a loan-for-use agreement. The agreement confirms that the housing was handed over to a legal entity, and the risk of losing the benefit is much higher because the Tax Code names these cases directly.

What should decide the matter is how the property is actually used, not a formal match of addresses.

Can tax be reassessed for past years?

Yes. Where there are lawful grounds, the tax authority may check whether the benefit was applied correctly in earlier periods.

For example, an owner leased a flat to a company for several years but kept using the benefit. If this is established, the property tax may be recalculated. The limitation periods, the way they run under martial law and the actual period of use must be taken into account.

The State Tax Service explains that if housing was rented out for only part of the year, the benefit does not apply from the month the rental began until the end of the month it ended (STS Main Department in Dnipropetrovsk region). So losing the benefit does not necessarily cover the whole year.

Reassessments for past years must rely on the rules in force in those years. The new registration rules do not by themselves create tax liabilities for past periods.

Tax on rental income

If the owner is an individual and the tenant is a company, there is another issue: tax on the rent.

Under subpara. 170.1.2 of the Tax Code, the tenant acts as the landlord’s tax agent. So the company withholds and pays the tax on the rent.

Since 23 October 2026, Law No. 5025-IX of 15.10.2026 has set out subpara. 170.1.4 in a new wording. Income from leasing residential and non-residential property is now taxed at the rate in para. 167.2, which is 5%. Military levy on this income is 5%.

Together that is 10% of the rent: 5% personal income tax and 5% military levy. Income accrued or paid earlier is governed by the rules in force at that date.

One more detail from subpara. 170.1.2: tax is calculated on the rent under the agreement, but not less than the minimum rental payment, if the local council has set and published it. So a token rent does not always lawfully reduce the tax.

Is it safe to register an LLC in the founder’s flat?

Registering a company in the founder’s flat is not prohibited as such. But it is now worth weighing in advance what using the home will mean for the owner.

Check:

1. Whether ownership of the flat is registered in the DRRP.
2. Which document confirms the right to use the address.
3. Whether the premises will actually be handed over to the company.
4. Whether the owner will receive rent.
5. Whether the owner uses the property tax benefit.
6. Whether there are other restrictions on using the home.

Take particular care when a company is registered in the home of its founder, director or another related person. A convenient choice for the company may cost the owner money.

What businesses and property owners should do

1. Check the DRRP. Before creating a company or changing its address, make sure the ownership or other property right to the premises is registered.
2. Document the use properly. The agreement should reflect what actually happens and comply with the law.
3. Assess the tax consequences for the owner. Especially if this is an individual’s home and the owner uses the benefit.
4. Review past periods. If the premises have already been leased or lent, check whether tax was calculated and the benefit applied correctly.
5. Be ready for a reassessment. If a tax assessment notice arrives, check the grounds, period, rate, floor area, right to the benefit and the assessment procedure. What to do after receiving one is covered in our article on the tax assessment notice.

If the situation is ambiguous, it is worth getting an individual tax consultation on your particular use of the property.

Conclusion

The new rules concern registration, but their effect is wider: they tie the company, its address and specific premises together on paper, and the tax authority can use that too.

For the company, the main risk is a refusal of registration because the right of use is not confirmed. For the owner, the consequences are wider: losing the benefit, tax on the rent and a possible recalculation of property tax for past periods.

So before registering a company or changing its address, check both the documents for the premises and the tax consequences for their owner.

Legal framework

• Law of Ukraine No. 5020-IX of 14.10.2026 “On Property Valuation” — amendments to Law No. 755-IV (in force since 27.10.2026)
• Law of Ukraine No. 755-IV on State Registration of Legal Entities, Individual Entrepreneurs and Public Associations — item 3-5 of part 2 and part 8 of Art. 6 (checking the basis of use), item 20 of part 1 and item 17 of part 4 of Art. 17 (lease or loan-for-use agreement), item 13-1 of part 1 of Art. 28 (ground for refusal)
• Tax Code of Ukraine No. 2755-VI — para. 167.2 of Art. 167 (5% rate), subparas. 170.1.2, 170.1.4 of para. 170.1 of Art. 170 (tax agent, minimum rental payment, rate for rental income from real property), subparas. 266.4.1, 266.4.3 of para. 266.4 of Art. 266 (property tax benefits), subpara. 1.3 of para. 16-1 of subsection 10 of section XX (military levy)
• Law of Ukraine No. 5025-IX of 15.10.2026 — new wording of subpara. 170.1.4 of the Tax Code (from 23.10.2026)
• Letter of the Ministry of Justice of Ukraine of 29.10.2026 No. 163782/8.4.3/32-26 — explanation of how to apply the amendments to Law No. 755-IV

ARGUS Consulting group supports company formation and registration, checks the legal basis for using real property, assesses tax risks and defends clients in disputes with the tax authority. See legal support for business and tax dispute support.

This material is for information only and is not individual legal or tax advice. Legal framework as of 06.11.2026.