Court declares taxation of pensions unconstitutional

By its decision of February 27, the Constitutional Court has recognized the taxation of pensions as unconstitutional. This is reported by zn.ua with reference to the court's press service.

It is noted that on Tuesday, the Constitutional Court considered the constitutional filing of 48 deputies of the Verkhovna Rada concerning the compliance of the provisions of paragraphs 12 and 14 of Point 32 of Section I of the Law "On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine Regarding Tax Reform" with the Constitution and submission of the Supreme Court regarding constitutionality of the provisions of paragraph 1 of subparagraph 164.2.19 of Point 164.2 of Article 164 of the Tax Code.

As the court established, in the sphere of pension support, the approach of the legislator, when a proportionate ratio between the insurance contribution and intended amount of pension, is to be recognized as fair, and the insured person can freely exercise his/her right to a pension in full. In the pension legislation, this ratio is achieved by determining the dependence of the amount of pension on the duration of the pensionable service and the amount of salary.

According to the Constitutional Court, the taxation of a pension, starting from its certain size, violates a fair approach in establishing pension, since it leads to its actual reduction. It was also noted that after the introduction of the taxation of pensions in the legislation, the Rada made three amendments three times for two years.

The decision of the Constitutional Court is binding, final and cannot be appealed.

Zn.ua recalls that in Ukraine, pensions are 15% taxed since 2015. Taxation refers to that part of the pension that exceeds three minimum wages. In August 2015, President Petro Poroshenko exempted pensions of participants in the Second World War from taxes. Last June, Poroshenko instructed the Cabinet to increase pensions and abolish their taxation in the fall.