Browse topics

  • Governing law
    NameLaw or Code?
    Civil Code of Ukraine Code
    Tax Code of Ukraine Code
    On Advertising Law
    On Protection from Unfair Competition Law
    On Prohibition of Gambling in Ukraine Law
    On State Lotteries in Ukraine Law
    On Electronic Commerce Law
    On Personal Data Protection Law

    Last modified 10 Feb 2017

  • Extra-territoriality

    Based on complex interpretation of legislation related to prize promotions, Ukrainian legislation is applied and enforced with respect to prize promotions operated by non-resident legal entities, if:

    • The prize promotion is operated in the territory of Ukraine, and/or

    • The prize promotion, even if it is operated from abroad (via the Internet), is aimed at Ukrainian consumers

    Last modified 10 Feb 2017

  • Skills competitions

    Yes. Ukrainian legislation regulates prize promotions based on skill as a public promise of a reward, based on the result of competition. Specifically, the Civil Code of Ukraine establishes that skill competitions may relate to intellectual or creative activity, commission of a certain action, performance of work, etc.

    Last modified 10 Feb 2017

  • Prize draws

    The Law of Ukraine on 'Prohibition of Gambling in Ukraine' prohibits gambling activity in Ukraine. Within the meaning of the said law, gambling is any game, a compulsory condition of which involves the payment of money by the player, including via e-payment, which will enable the participant to either get the winning (prize) in any form, or to not get it, depending on chance.

    The following (among other things) are excluded from the prohibition on gambling and can be run in Ukraine:

    1. Prize draws based on chance run on a free of charge basis aimed at promoting (popularizing) certain goods, services, trademarks, company names or areas of business offered by a business entity, commercial program which provide for prizes either in monetary or property form, and

    2. Lotteries

    Lotteries are subject to separate regulation by the Law of Ukraine on 'State Lotteries in Ukraine'. In particular, the law prohibits holding lotteries without a license. Currently, the application process for lottery licenses is blocked due to the absence of adopted license requirements. State lottery operators are operating based on the respective licenses issued to them prior to adoption of the Law of Ukraine on 'State Lotteries in Ukraine'; thus, existing lottery operators are conducting their activity based on the old licenses, but the order allowing new licenses to be obtained has not been adopted yet.

    Last modified 10 Feb 2017

  • Selection of winners

    Ukrainian legislation does not provide for any requirements relating to the selection of winners and award of prizes. Promoters are free to define the selection procedure for winners and the award of prizes in the terms and conditions of their prize promotion.

    Last modified 10 Feb 2017

  • Judges

    No particular requirements on judges or judging for skills competitions are established by the law. According to the Civil Code of Ukraine, a winner of a skill competition shall be defined according to the criteria set out by a competition organizer in its terms and conditions.

    Also, the Civil Code of Ukraine provides that the winner of the skill competition is the person who achieved the best result.

    Based on results of the skill competition, the competition founder may approve a decision on the following:

    • Award all prizes, provided by the terms and conditions of the competition

    • Award specific prizes, if several of them were envisioned

    • Refuse the awarding of prizes, if none of the entries meets the requirements of the competition, or

    • Award an encouragement prize

    The results of the skill competition may be disputed by an interested party in court.

    No other requirements are established by the law.

    Last modified 10 Feb 2017

  • Prizes

    No.

    According to the law, prizes (types, quantity, etc) shall be defined in the terms and conditions of prize promotions. In this regard, from a consumer protection perspective, the prizes to be awarded must correspond to those prizes which were announced by the advertiser in the terms and conditions of the prize promotion.

    Last modified 10 Feb 2017

  • Registration requirements and fees

    Registration Requirements

    There is no requirement to register prize promotions.

    Fees/Taxes payable

    Tax aspects of prize promotions are as follows:

    Corporate Profit Tax (CPT)

    Basic CPT rate is 18%. Generally, the cost of prizes purchased by a prize promotions operator is deductible for CPT purposes. The general approach of the Ukrainian tax authorities is that all deductions must be supported with the appropriate original documents.

    Value Added Tax (VAT)

    Generally, the transfer of prizes by the prize promotions operator to the winner is treated as a taxable supply for VAT purposes (if such operator is a VAT-payer). Thus, prize promotions operators must charge 20% VAT on the value of the prize but in any case the VAT base may not be lower than the purchase price of such prize. Such VAT is not collected from prize winners and is paid by operators at their own expense.

    Personal Income Tax (PIT)/Military Duty

    Basic PIT rate is 18%. Temporary military duty is 1.5%.

    Prize promotions operators are obliged to act as a tax agent for the winner. If the amount of the prize value is less than UAH 689 per (for 2016), it is exempted from PIT and military duty.

    Prize promotions operators are liable to pay PIT and military duty on behalf of the winner if the prize amount exceeds UAH 689 (for 2016). In cases where the prize is provided in non-monetary form, WHT and PIT are paid by prize operator at its own cost (on top of the value of prizes).

    It is also important to note that operators cannot act as tax agents in those cases where prizes are distributed to an unidentified recipient.

    Lotteries have further specific tax treatment.

    Last modified 10 Feb 2017

  • Other local requirements

    Other key legal requirements for prize promotions are as follows:

    • Advertisements about the conduct of prize promotions and skill competitions must contain information regarding time periods, the place of the event, and indicate the competition organiser

    • Information regarding all changes in terms and conditions, places and competition time period should be presented in the same way as it was initially distributed

    • Other general requirements established by the law of Ukraine 'On Advertising' must be complied with (eg advertising of certain categories of goods, etc)

    Last modified 10 Feb 2017

  • Timing

    No.

    Last modified 10 Feb 2017

  • Translations

    The Law of Ukraine on 'Principles of State Language Policy' prescribes that advertisements should be written in:

    • The state language (ie Ukrainian), or

    • A language chosen by the advertiser (that, in fact, may be any language)

    In practice, however, advertisements in foreign languages, which are aimed at Ukrainian consumers, should be translated into Ukrainian.

    Last modified 10 Feb 2017

  • Penalties for non-compliance

    The following penalties can be outlined with respect to conducting prize-promotions:

    • For non-compliance by advertisers relating to the content of advertisements or regarding the dissemination of such advertisements - fines amount to five times the cost of the distributed advertisement

    • For breach of requirements of the Law of Ukraine on 'Protection from Unfair Competition' - fines in amount of up to 5% of business profits (group) for the last year (if profits of the business entity for the last year is not declared - an amount of US$6640)

    • For breach of data protection rules within prize promotions - fines of approximately US$66 - US$330

    Separately, please see the penalties for conducting gambling which is prohibited in Ukraine - fines in amount of around US$450,000 with confiscation of gambling facilities and all the realized profit is to be paid to the State budget of Ukraine. Also Ukrainian legislation provides for criminal responsibility for conducting gambling in the form of fines of approx. US$6,600 - US$26,600, depending on the circumstances of the commission of the crime.

    Finally, the following penalty is established for conducting lottery without license - fines of approx. US$906,000, together with the confiscation of gaming facilities.

    Last modified 10 Feb 2017

  • Restrictiveness of regulations

    The Ukrainian legislation does not set out detailed requirements, applicable to holding prize promotions. Thus the applicable legislation cannot be regarded as onerous.

    However, the Ukrainian legislation strictly prohibits gambling and holding lotteries without a license.

    Last modified 10 Feb 2017

  • Regularity of sanctions

    Serious sanctions are rarely imposed. As a matter of practice, serious sanctions could be imposed by the Antimonopoly Committee of Ukraine, if, for example, misleading information (which is very broadly interpreted under Ukrainian law) in advertising or comparative advertising were distributed.

    Last modified 10 Feb 2017

  • Key contacts
    Natalia Pakhomovska
    Natalia Pakhomovska
    Partner DLA Piper Ukraine LLC [email protected] T +380 44 495 1789 View bio
    Natalia Kirichenko
    Natalia Kirichenko
    Senior Associate DLA Piper Ukraine LLC [email protected] T +380 44 490 9575 View bio

Governing law

What are the applicable governing laws or codes for prize promotions?

Ukraine

Ukraine

NameLaw or Code?
Civil Code of Ukraine Code
Tax Code of Ukraine Code
On Advertising Law
On Protection from Unfair Competition Law
On Prohibition of Gambling in Ukraine Law
On State Lotteries in Ukraine Law
On Electronic Commerce Law
On Personal Data Protection Law