21 January, 2025
On 21 January 2025, the Second Senate of the Constitutional Court of Ukraine (hereinafter , the “Court”) at its plenary session deliberated the case upon the constitutional complaint of Geomax-Resource Limited Liability Company and delivered Decision No. 3-r(ІІ)/2025.
Limited Liability Company “Geomax-Resource”(hereinafter, the “Company”) filed a constitutional complaint with the Court regarding the compliance of a separate provision of paragraph 2 of Article 14.1.212 of the Tax Code of Ukraine (the “Code”) as amended by the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine on Tax Reform” No. 71-VIII dated 28 December 2014 (hereinafter, “Law No. 71”), namely “goods specified in Article 215.3.4 of this Code” (the “disputed provision of the Code as amended by the Law No. 71”).
In substantiation of the unconstitutionality of the disputed provision of the Code as amended by Law No. 71, the Company argued, among other things, that the amendment (addition) of all mandatory elements of the excise tax defined by the disputed provision as amended by Law No. 71 was adopted less than six months before the start of the new budget period from which such rules and rates were introduced, which is a violation of the principle of stability of tax legislation.
The court found that the disputed provision of the Code as amended by Law No. 71 had ceased to be effective, but continued to apply to legal relations arising during its validity.
The Decision states that if the legislative regulation introduces new requirements that will worsen the legal position of a certain number of persons, the legislator should provide for a sufficient transition period (reasonable time period) from the date of publication of the law to its entry into force (commencement of its application), during which the interested persons would have the opportunity to prepare for the new requirements.
The court noted that the Company could not have had sufficient time to adapt to the changes in the system of legal relations caused by the adoption of Law No. 71, which led to a violation of its legitimate expectations and non-compliance with the principle of legal certainty.
In addition, the Court stated that the transitional period between the publication of Law No. 71 (31 December 2014) and the entry into force of Law No. 71 (1 January 2025) of less than 1 day was not sufficient for the relevant business entities (including the Company) to adapt to the legislative innovations, timely change the rules of financial and tax accounting of their activities, and adjust their other actions to properly fulfil the new tax liability.
In view of the above, the Court concluded that the disputed provision of the Code as amended by Law No. 71 does not comply with the Constitution of Ukraine (is unconstitutional).
The judge-rapporteur in the case is Galyna Yurovska.
The text of the Decision will be published on the official website of the Court.
