Essential conditions for a mine (barter) agreement + a template for a mine (barter) agreement with an act of acceptance and transfer

Modern economic relations are built in such a way that it is impossible to imagine them without the purchase or sale of any goods, services, transport, real estate. From a legal point of view, we draw up all such transactions within the framework of a sales contract.

However, there are situations when we need not just to buy or sell goods for money, but when it is necessary to exchange goods between subjects.

In such cases, we come to the aid of such a type of contract of sale as an exchange (barter) contract.

An exchange (barter) agreement is not as popular as a sale and purchase agreement, but it has its own characteristics and purpose of application, and helps to settle several special contractual obligations.

That is why this type of contract occupies an important role in the civil legislation of Ukraine.

The concept of an exchange (barter) agreement and features of its application.

Firstly, it should be noted that this type of contract is a type of contract of sale, and all provisions of the contract of sale are applied to it in accordance with the Civil Code of Ukraine (hereinafter referred to as the CCU).

According to Art. 715 of the Civil Code of Ukraine, under a mine (barter) agreement, each of the parties undertakes to transfer ownership of one commodity to the other party in exchange for another commodity.

The difference from the usual contract of sale is that in this contract we do not have one buyer and one seller.

Each of the parties to the exchange agreement is the seller of the goods that he transfers in exchange, and the buyer of the goods that he receives in return (part 2 of article 715 of the Civil Code).

That is, each subject has the rights and obligations of both the buyer and the seller in relation to each other.

As for other rights and obligations of the parties to the exchange agreement (regarding the quality of the goods, the quantity of goods, their cost, etc.), they are determined by the agreement and the relevant norms of the Civil Code of Ukraine or other laws governing the purchase and sale, supply, contracting, etc. P. In the same way, issues related to the termination of the contract with the application of the legal consequences of non-fulfillment or improper fulfillment of the terms of the exchange agreement should be resolved.

In addition, in this type of contract, we do not have a payment for a mine object in the usual monetary form.

The payment for each of the subjects as a seller is the transfer of their ownership of the property to another subject of the contract acting as a buyer, and vice versa.

It should also be noted that the concepts of mines and barter are identical in modern legislation. Although earlier the concept of barter was interpreted as a kind of barter agreement between legal entities.
 

The object of an exchange (barter) agreement

Under an exchange agreement, one party transfers goods to the other party in exchange for another goods. It is the goods for which the parties exchange that are the objects of the contract.

In this case, the concept of “goods” should be understood as any thing, that is, an object of the material world, in respect of which civil rights and obligations may arise (Article 179 of the Civil Code).

But an obligatory condition should be the existence of the right of ownership to it from the subjects of the contract.

Art. 181 of the Civil Code provides that things can be movable and immovable.

Immovable things (real estate, real estate) include land plots, as well as objects located on a land plot, the movement of which is impossible without their depreciation and change in their purpose (part 1 of article 181 of the Civil Code).

Movable things are things that can be freely moved in space. Here we can include any things that are not prohibited in circulation and are in the private property of the parties. It can be electrical engineering, furniture, equipment, spare parts, etc.

In addition, part 5 of Art. 715 of the Civil Code of Ukraine provides that the agreement may establish the exchange of property for works (services).

In this case, it is important to note in the contract what works (services) need to be performed, their scope and the method of assessing the fact of services performed.

At the same time, the barter agreement will already be mixed with a regular sale and purchase agreement and a work contract, because the parties will act as a seller-buyer in the event of transfer of property and as a customer-contractor in the event of work being performed.

Features of the conclusion and execution of an exchange (barter) agreement may be provided not only by the Civil Code, but also by other laws. For example, this applies to the Law of Ukraine "On the regulation of barter (barter) operations in the field of foreign economic activity" dated December 23, 1998.

As for the mines of state and communal property, according to paragraph 4 of Art. 293 of the Economic Code of Ukraine (hereinafter referred to as the Civil Code of Ukraine), property referred by law to fixed assets that belongs to state or communal property cannot be the object of a mine (barter) if the other party to the mine (barter) agreement is not, respectively, state or communal enterprise. Legislation may establish other features of the implementation of barter (barter) transactions related to the acquisition and use of certain types of property, as well as the performance of such transactions in certain sectors of the economy.

The norms on mine (barter) are not used for outwardly similar relations, called exchange. Yes, mines are not contracts for the exchange of residential premises carried out by citizen tenants. When concluding such contracts, there is no change of ownership. It is also impossible to consider as an exchange agreement made by a citizen, the exchange of a good-quality product purchased in a store for another. The right granted to the buyer follows from the fact of the conclusion of the contract of sale.

Thus, we see that the range of objects of civil rights that can be the subject of an exchange agreement is much wider than in a normal sale.
 

Parties under a mine (barter) agreement

This type of contract does not have special requirements for its subject composition and the provisions of a regular sales contract apply to it.

As a general rule, the parties to a mine (barter) agreement may be:

• capable individuals;
• legal entities (enterprises, institutions and organizations);
• individual entrepreneurs.

However, the presence of such restrictions may take place under separate laws.

Of course, if an exchange (barter) agreement is concluded in the sphere of management, its parties may be entities recognized by such rules of the Civil Code of Ukraine.

To conclude an exchange (barter) agreement in the field of foreign economic activity, its parties must be recognized as subjects of such activity according to the requirements, in particular, of the Law of Ukraine "On Foreign Economic Activity".
 

Surcharge and notarization

In the case of a mine from one apartment to another or a house to an apartment, their condition will usually not be equivalent, which affects their value.

Also, when exchanging a car for a property, the value of the latter will usually be higher than the value of the car.

In such cases, Part 3 of Art. 715 of the Civil Code of Ukraine provides that the contract may establish an additional payment for a product of a higher value, which is exchanged for a product of a lower value.

According to Art. 657 of the Civil Code of Ukraine, a contract for the sale of a land plot, a single property complex, a residential building (apartment) or other real estate is concluded in writing and is subject to notarization, except for contracts for the sale of property in a tax lien.

Such transactions combine elements of contracts of sale and exchange and are of a mixed nature.

That is why an exchange (barter) agreement for these objects must be concluded with a notary and it indicates the provision on additional payment in cash and the procedure for its implementation.

Taxes on personal income under an exchange agreement

Based on the fact that in case of mini (barter) real estate by individuals, the parties act as sellers and buyers of real estate, each of them is subject to the taxation provision under contracts for the sale of such property.

From January 1, 2022, the Law of Ukraine No. 1914 “On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine to ensure the balance of budget revenues” established changes in the amount of taxation of income of individuals under real estate purchase and sale agreements.

Yes, p. 172.1 Art. 172 of the Tax Code of Ukraine (hereinafter referred to as the TCU) establishes that it will be possible to sell real estate to individuals without paying tax only if the sale (or in our case, a mine) occurs for the first time in the current calendar year and such property is owned by the subject of the mine (barter)) over three years.

This rule applies to the following objects (Article 172.1 of the TCU):

• a residential building, an apartment or part thereof, a room, a garden (country) house (including an object of construction in progress of such objects, a land plot on which such objects are located, as well as household structures and buildings located on such a land plot);
• a land plot not exceeding the norms of gratuitous transfer, determined by Article 121 of the Land Code of Ukraine, depending on its purpose;
• an agricultural land plot directly received by a taxpayer into ownership in the process of privatization of lands of state and communal agricultural enterprises, institutions and organizations or privatization of land plots that were in the use of such a payer, or allocated in kind (on the ground) to the owner of a land share (share), and also such land plots received by the taxpayer by inheritance.

The condition that such property is owned by the taxpayer for more than three years does not apply to property received by the taxpayer by inheritance (clause 5, article 172.1 of the TCU).

Subject to these conditions, the subjects of the barter agreement are exempt from income tax. When concluding a barter mine transaction, each party, as a buyer, must pay mandatory payments:

• military tax - 1.5%;
• state duty - 1%;
• fee to the Pension Fund - 1%;
• notarial services.

If in the current calendar year a person has already carried out the sale or exchange of real estate, then in the case of the conclusion of an exchange (barter) agreement for the second time, this agreement will be subject to income tax in the amount of 5% of the amount of the agreement.

Also, the 5% personal income tax rate will be applied if an individual sells property that is not listed in Art. 172.1 GCC. For example, non-residential premises. The tax should be paid already at the first sale.

The tax rate on net income will increase to 18% when an individual sells a third or more real estate objects during the year from the list indicated earlier.

That is, if a person sells a third apartment or house during the year, then 18% personal income tax and 1.5% military tax should be paid from the income received. The same taxes will have to be paid if, for example, a second non-residential property is sold during the year (clause 172.2, article 172.2 of the TCU).

You can download a template of an exchange (barter) agreement and an act of acceptance of transfer to it from the link. Or use the extended functionality of the system in terms of maintaining a register of counterparties, generate an agreement, act, invoice filled with data, and also sign it with a qualified digital signature.