METRO CASH & CARRY Ukraine from April 2014 to March 2016 was paying taxes for shopping centers and land plots, on which such shopping centers are located, which were in the temporarily occupied territory of Ukraine, and with the fact that the company could not really use and dispose this property. So, we can talk about the absence of reasons for taxes that are collected from the owners/users of such property.
It was recognized at the legislative level, and from January 1, 2017, such amounts of taxes were granted overpayment status. However, rather quickly after, the legislator additionally found that such amounts are not a subject to return by the Law “On Amendments to the Tax Code of Ukraine on Improvement of Investment Climate in Ukraine” of March 23, 2017, No. 1989–VIII (Law No. 1989).
However, the discretion even of the legislative authority is limited and has to comply with the Constitution. The specialists of KM Partners worked out the position and the normative justification for a constitutional complaint of the METRO CASH & CARRY Ukraine and proved in the Constitutional Court of Ukraine that the provision of the Law No. 1989 regarding deprivation of the right for overpayments returning for the land tax for land plots, which are located in ATO territory (now – JFO), contradicts the rule of law principle (in particular, the guarantee of legal certainty) and violates the right of property guaranteed by the Constitution of Ukraine.
The Constitutional Court of Ukraine agreed with the position and argumentation presented in the constitutional complaint and recognized the provision of the Law No. 1989 regarding deprivation the right for return of overpayments from the land tax for land plots which are located in ATO territory, which does not comply with the provisions of part I, Article 8, part IV Article 41 of the Constitution of Ukraine. The full text of the corresponding decision of the Constitutional Court of Ukraine with details No. 3-p (І)/2019 as of June 5, 2019 was published on the website of the Constitutional Court of Ukraine by the link (available by the link: http://www.ccu.gov.ua/sites/default/files/docs/3_p1_2019.pdf).
Due to this Decision of the Constitutional Court of Ukraine, the rights of METRO CASH & CARRY Ukraine and other taxpayers on overpayments return from local taxes in the ATO territory will be restored, and also a solid foundation will be laid for solving other disputed tax issues and the development of tax disputes in general.
Representation of interests of METRO CASH & CARRY Ukraine during the working-out of the legal position and preparation of the appeal to the Constitutional Court of Ukraine was carried out by team of experts of KM Partners, Senior of Counsel Mariia Kozlenko and Lawyer Artem Shcherbyna under the supervising of Senior Partner Aleksander Minin.