Accounting for Google, Meta and YouTube Advertising: Documents, Expenses and VAT

Before paying for advertising on Google, Meta/Facebook or YouTube, check who sells the service under the contract and invoice, and enter the store’s correct details in the payment profile. The tax treatment depends on this and on your value added tax (VAT) status. A sole proprietor (individual entrepreneur) who is not registered for VAT and buys an electronic service from a nonresident registered under Article 208¹ of the Tax Code of Ukraine pays 20% VAT included in the price to the supplier. A VAT-registered sole proprietor and a legal entity, whether or not registered for VAT, generally calculate 20% VAT themselves on a nonresident’s advertising services whose place of supply is Ukraine.

For accounting, keep the contract, invoices, payment confirmations and reports on the advertising provided. Send the documents to your accountant as soon as funds are debited: an advance payment may already trigger a VAT liability, even though it is not yet an accounting expense for a legal entity. The separate former 20% tax on payments to nonresidents for advertising has been repealed. VAT and any tax that may apply to other types of nonresident income must be considered separately.

How to identify the advertising supplier

The name of the advertising platform does not identify the counterparty. A store’s advertising may be sold by a Ukrainian company, a foreign company or an agency. A Ukrainian-language account interface, payment in hryvnias or use of a Ukrainian card does not by itself confirm that the supplier is a Ukrainian resident.

Before the first payment, the owner or employee responsible for advertising should check:

• the supplier’s full name, country and tax details in the current contract or platform terms;
• the seller’s name on the invoice, meaning the bill for advertising;
• the buyer’s details in the payment profile: sole proprietor or legal entity, address and tax details;
• the buyer’s VAT status and individual tax number, if registered for VAT;
• the service price excluding VAT, the tax amount, currency and advertising period.

If the documents show different suppliers or incorrect buyer details, find out why and correct the profile before the next payment. After changing the contract or payment profile, check the new counterparty. Do not automatically carry over details from an old invoice.

If advertising is sold by a Ukrainian supplier

A Ukrainian supplier registered for VAT charges tax under the usual rules for domestic supplies. A buyer registered for VAT may claim an input tax credit on the basis of a properly prepared tax invoice registered in the Unified Register of Tax Invoices (URTI). The URTI is the state register of tax invoices. A buyer not registered for VAT cannot claim an input tax credit.

If the Ukrainian supplier is not registered for VAT, it does not add this tax to its service. The buyer does not calculate VAT under Article 208, which applies to services supplied by nonresidents. When a store buys advertising through a Ukrainian agency, the accountant should review the contract: the agency may sell its own service or act as an intermediary at the store’s expense.

Who calculates VAT on a nonresident’s advertising

Under subparagraph 186.3(b) of the Tax Code of Ukraine (TCU), the place of supply of advertising services is determined by the buyer’s place of registration. Paragraph 186.3¹ applies to electronic services. If the service recipient is a Ukrainian store, the place of supply under these rules is Ukraine.

Automated advertising placement and the provision of advertising space on the internet qualify as electronic services under subparagraph 14.1.56⁵ of the TCU. The VAT procedure for these services depends on the buyer’s status.

A legal entity not registered for VAT cannot use the special procedure for individuals under Article 208¹. A platform’s registration as an electronic service supplier does not exempt that legal entity from its own obligations under Article 208.

For a sole proprietor not registered for VAT, the exception under Article 208 applies when the electronic service is sold by a nonresident registered under paragraph 208¹.2. If the supplier does not have that registration, the buyer applies Article 208. If the invoice has no VAT line, clarify why; its absence does not automatically mean the transaction is tax-exempt.

A sole proprietor registered for VAT must provide the platform with their individual VAT number. If the platform mistakenly invoices them as an individual not registered for VAT, correct the profile and documents. Tax shown on such an invoice does not by itself replace the recipient’s tax invoice under Article 208.

An advertising agency’s service may follow a different procedure

A marketer who personally prepares a strategy, configures a campaign or advises a store by email does not necessarily provide an electronic service as defined by the TCU. The accountant determines the type of service from its substance and the contract.

If a sole proprietor not registered for VAT receives from a nonresident an ordinary advertising or consulting service whose place of supply is Ukraine, the sole proprietor calculates VAT under Article 208, files a calculation and pays the tax. The special procedure in Article 208¹ for electronic services does not apply here. Under some contracts, payment for advertising space and the agency’s fee must be treated as separate transactions.

How to calculate VAT and determine the reporting month

Under Article 208, the buyer calculates VAT on the date of the first of two events: the bank or non-bank payment service provider debits funds to pay for the service, or the supplier prepares a document confirming that the service was provided. Paragraph 187.8 of the TCU sets this rule. It also applies to advance payments.

The VAT base is the contractual service price, including taxes and charges built into the price, except VAT. If the price is set in a foreign currency, the accountant converts it into hryvnias using the official National Bank of Ukraine (NBU) exchange rate on the date the liability arises. The rate at which the bank bought the currency or debited hryvnias from a card may differ. For VAT, apply the rule in paragraph 190.2 of the TCU.

Illustrative example: the service costs 10,000 Ukrainian hryvnias (UAH) excluding VAT

Assume a nonresident provided an electronic advertising service with a base price of UAH 10,000. The example does not include bank commissions or other payments.

If UAH 10,000 is already the final price including 20% VAT under Article 208¹, the tax included in it is 10,000 × 20 ÷ 120 = UAH 1,666.67. Do not add another UAH 2,000 to that price. Always check which amount the invoice identifies as the base and which as the total.

Another illustrative example: under Article 208, a store paid for a service costing 250 US dollars (USD). Assume the NBU rate on the date of the first event is UAH 40 per dollar. The VAT base is 250 × 40 = UAH 10,000. VAT is 10,000 × 20% = UAH 2,000. The UAH 40 exchange rate in this example is illustrative.

What reports the buyer must file

A sole proprietor or legal entity registered for VAT

The accountant prepares a tax invoice on the date of the first event and registers it in the URTI. For a nonresident’s services, use reason code 14 and the seller’s conditional individual tax number (ITN) 500000000000, and state the nonresident’s name and country of registration. Enter the buyer’s own details in the buyer section. Paragraphs 8 and 12 of the Procedure approved by Ministry of Finance Order No. 1307 set out these requirements.

VAT at the standard rate is reported in line 6.1 of the VAT return. For an invoice registered on time, the input tax credit is reported in line 13.1 for the same period. If the invoice is registered late, report the credit in the period of registration, but under the general rule in paragraph 198.6 of the TCU no later than 365 calendar days from the date the invoice was prepared. For documents from previous years, the accountant must separately account for the legislative suspension of this period. The State Tax Service explains the tax invoice procedure and return lines.

An input tax credit is an amount of VAT that a taxpayer may, if the applicable conditions are met, take into account when calculating tax payable to the budget. For a nonresident’s services, the basis is the invoice prepared by the buyer and registered in the URTI. If advertising is used in non-taxable transactions or outside business activities, the accountant must also check liabilities under paragraph 198.5 and Article 199 of the TCU.

During martial law and for six months after the month in which it is terminated or cancelled, invoices prepared from the 1st through the 15th day of a month must be registered by the 5th day of the following month, inclusive. Invoices prepared from the 16th day through the end of the month must be registered by the 18th day of the following month, inclusive. These are the temporary deadlines in paragraph 89 of subsection 2 of Section XX of the TCU, also set out in the State Tax Service explanation.

A legal entity or sole proprietor not registered for VAT applying Article 208

The buyer does not prepare a tax invoice. The buyer files the “Calculation of Tax Liabilities Accrued by a Recipient of Services Not Registered as a VAT Payer…” using the form established by Ministry of Finance Order No. 21. A calculation is required for the month in which the relevant liabilities arose. This procedure does not give the buyer a right to an input tax credit.

The deadline to file the monthly VAT return or such a calculation is 20 calendar days after the last day of the reporting month. The buyer pays the liability calculated in the return or calculation within 10 calendar days after the end of the prescribed 20-day filing period. Moving the filing deadline because it falls on a weekend or holiday does not extend this payment deadline. If the payment deadline itself falls on a weekend or holiday, the extension under paragraph 57.1 of the TCU applies. For a taxpayer registered for VAT, the amount payable depends on the total for the entire return. The State Tax Service separately explains filing the calculation and paying VAT as a buyer not registered for VAT.

If the filing deadline falls on a weekend or holiday, the extension under paragraph 49.20 of the TCU applies. Paragraph 57.1 applies to the payment deadline. The accountant must determine the final dates using the calendar for the relevant month.

Illustrative example: a legal entity not registered for VAT paid for advertising on October 8, and the supplier prepared the service document on October 20. The first event was October 8. Under the 2026 calendar, the calculation for October must be filed by November 20 inclusive, and UAH 2,000 in VAT from the previous example must be paid by November 30 inclusive.

What documents to keep for advertising accounting

The owner assigns an employee to download documents from the advertising account every month and send them to the accountant. If the owner manages advertising personally, the owner does this. The documents should link the specific buyer, supplier, campaign, service period and amount.

• Keep the contract or accepted platform terms, their version and the payment profile details.
• Download the invoice, service acceptance certificate or other supplier document for the relevant period.
• Keep a bank statement or other confirmation that funds were debited.
• Download an advertising report showing the period, campaigns, budget spent and impression results.
• Keep the advertising materials or links to them to show how the advertising relates to the store’s products.
• For accounting, prepare a Ukrainian translation of documents written in a foreign language.

A source document records a business transaction. Under Article 9 of Law No. 996-XIV, it must include the document’s name and date, the company’s name, the nature and scope of the transaction, its unit of measurement, details of the persons responsible, and a signature or other data that identifies them. Electronic form is permitted if the requirements of the law on electronic documents are met. For documents generated automatically by a system, the law separately provides for an electronic signature or seal.

An invoice may be a source document if it confirms that the service was provided and meets the documentation requirements. An invoice requesting payment for a future service does not confirm that advertising has already been provided. An advertising account screenshot can help explain the transaction, but not every screenshot contains the required details of a source document.

Article 9 allows positions, surnames and signatures on the service customer’s side to be omitted if the document includes the date or period of service, a written contract provides for this procedure, and the company records the transaction in the period in which it occurs. This exception does not apply, among other things, to transactions involving public funds, leases of state or municipal property, construction contracts, design and survey work, donations, charitable assistance or humanitarian aid.

To confirm the supply of an electronic service, paragraph 208.5¹ of the TCU expressly permits a payment document, including one received electronically. This is a special rule for VAT. For a legal entity’s accounting expenses, the accountant must also check the source-document requirements and the actual service period.

Store documents separately from access to the advertising account, with a backup copy. For sole proprietors’ tax documents not subject to longer periods, the basic minimum retention period is 1,095 days; for the relevant documents of legal entities, it is 1,825 days. The buyer must keep documents and information needed for tax control of payments to nonresidents under paragraph 141.4 of the TCU for at least 2,555 days. This includes evidence used to support the application of the exception for payment for an advertising service. The period is counted from the filing of the tax reporting for which the documents were used; if that reporting was not filed, it is counted from the applicable filing deadline. Special transactions have longer periods; audits, appeals and legislative suspensions of time limits may extend retention. Before deleting documents, the accountant should check paragraphs 44.3–44.4 of the TCU.

When advertising reduces taxable income or profit

A sole proprietor under the general tax system

Subparagraph 177.4.4 of the TCU expressly permits advertising expenses connected with business activity. The sole proprietor must document the service received and its payment, as well as the link between the advertising and business income. For example, a campaign advertises products in the sole proprietor’s store and directs buyers to the sole proprietor’s website.

The sole proprietor records these expenses in their income and expense records under the rules of Article 177. A taxpayer registered for VAT does not include VAT amounts built into the price of purchased or sold goods and services in income or expenses. Payment for the owner’s personal advertising, or an expense without supporting documents, does not reduce taxable business income.

A sole proprietor or legal entity under the single tax system

Advertising expenses generally do not reduce the single tax: for Group 3, it is calculated on income, while Groups 1 and 2 are subject to established rates. The owner still tracks advertising to determine the store’s financial result. VAT obligations on a nonresident’s services depend on the buyer’s status and type of service, even if the buyer pays the single tax.

A legal entity subject to corporate income tax

An entity applying National Accounting Standard (NAS) 16, “Expenses,” classifies advertising as a selling expense under paragraph 19. Under subparagraph 9.2, advance payment for services is not yet an expense. The accountant records the advertising received in the proper period on the basis of documents. Subparagraph 9.2 expressly excludes advance payments for inventories, work and services from expenses under NAS 16, “Expenses”.

For example, a company added UAH 12,000 to its advertising account and received UAH 8,000 worth of advertising by the end of the month. In these circumstances, the unused UAH 4,000 remains an advance payment. The accountant determines the expense based on the service actually received and accounts for VAT separately according to the company’s status.

For corporate income tax, the accountant also checks tax differences if the company applies them. Subparagraph 140.5.4 requires an annual increase in financial results by 30% of the value of services purchased from specified categories of nonresidents. The country, legal form and tax status of the specific supplier matter. For an uncontrolled transaction, the company may avoid the 30% increase if it substantiates the expense amount using prices determined in accordance with the arm’s-length principle under the Article 39 procedure, without filing a controlled transactions report. If the purchase price exceeds the substantiated market level, the financial result is increased by the excess. For transactions that lack a business purpose and involve nonresidents specified in this subparagraph, an increase by the full purchase cost is provided, subject to the rules for other adjustments. Controlled transactions are considered under Article 39. These checks cannot be replaced by a conclusion based solely on the platform’s brand. The rules are in Section III of the TCU.

Must tax be withheld from a payment to a nonresident?

Law No. 1525-IX repealed, effective January 1, 2022, the special 20% tax on the production and distribution of advertising under former subparagraph 141.4.6 of the TCU.

An ordinary payment for a nonresident’s own advertising service falls under the exception for compensation for the cost of services provided in subparagraph 141.4.1(k), if the payment does not belong to another expressly listed income category. In that case, tax on the nonresident’s income is not withheld. The State Tax Service explanation on advertising payments clarifies this condition.

If the contract separately provides for royalties, interest or another payment covered by Article 141.4, the accountant must check the applicable rules and any relevant international treaty. For example, a commission or agency fee for services provided by a nonresident in Ukraine requires a separate assessment. Repeal of the advertising tax does not exempt all payments to nonresidents from tax.

How to track advertising expenses in Torgsoft

In Torgsoft financial accounting, the owner can create an “Advertising” category and subcategories for Google, Meta or agency services. The “Include in expenses” setting includes associated payments as expenses when calculating management profit. This lets the owner see how much the store spent on each channel.

The employee records a payment through “Payment — Financial Document” by selecting a cash account or bank account and entering the actual payment date, amount, counterparty and analysis category. For a bank account, cash movements can be reconciled with the bank statement. The data will be complete if the employee records every payment and selects the correct source of funds.

This accounting shows the movement of money. An advance to an advertising platform may appear in the management report on the payment date, while a legal entity’s accountant recognizes expenses in the period the service is provided. The accountant separately determines the tax base and prepares a tax invoice, return or calculation. For this, the accountant needs source documents and proof of payment.

How to organize monthly work

1. Before launching advertising, the owner approves the budget and gives the accountant the contract, supplier details and payment profile details.
2. After each debit, the responsible employee keeps proof of payment and immediately tells the accountant the date and amount.
3. The accountant determines the VAT procedure, the date of the first event and the VAT base for a foreign-currency payment, and prepares a tax invoice where required.
4. After the month ends, the employee downloads invoices and reports and reconciles the budget used, advance balance and payments.
5. The accountant records expenses, checks invoice registration, files the return or calculation and determines the amount payable.
6. The owner ensures funds are available for payment to the budget and compares advertising expenses with campaign results.

Consequences of missing deadlines

For failure to file, or late filing of, a return or calculation, paragraph 120.1 of the TCU sets a fine of UAH 340 for each violation. If a fine for a violation of this type has already been imposed on the taxpayer within the preceding year, the amount is UAH 1,020.

For late payment of an agreed liability, the basic fine is 5% of the amount of debt paid if the delay is up to and including 30 calendar days, and 10% if it is more than 30 days. For intentional late payment, the fine is 25% of the unpaid or late-paid monetary liability. If such an intentional violation is repeated within 1,095 calendar days or causes a delay of more than 90 calendar days, the fine is 50% of that amount. For fines for intentional violations under paragraphs 124.2–124.3, the tax authority must establish the taxpayer’s fault. Paragraph 109.3 does not set this as a mandatory condition for the basic fines under paragraph 124.1. These are the rules in Articles 120 and 124 of the TCU.

For late registration of tax invoices under the temporary rules, paragraph 90 of subsection 2 of Section XX of the TCU sets fines as a percentage of the VAT amount: 2% for a delay of up to 15 days, 5% for 16–30 days, 10% for 31–60 days, 15% for 61–365 days and 25% from 366 days. If an audit finds that a tax invoice prepared by the recipient of a nonresident’s advertising services was not registered, and the violation is stated in a tax notice-decision, paragraph 120¹.2 provides for a fine of 50% of the VAT amount. If the buyer does not register the invoice within 10 calendar days after the day the decision is received, another 50% fine applies.

Registration before the relevant audit begins rules out a fine under paragraph 120¹.2. If war-related consequences prevent the buyer from fulfilling tax obligations on time, the buyer must substantiate the inability under subparagraph 69.1 and Ministry of Finance Order No. 225 by filing an application and supporting documents within the period set by that Procedure. If the inability is confirmed, exemption from liability requires the obligations to be fulfilled within six months after martial law is terminated or cancelled. If the ability to comply returns earlier, overdue obligations must be fulfilled within 60 calendar days from the first day of the month following the month in which the ability returned.

If the tax authority has already decided that the taxpayer was unable to fulfil the obligations, the taxpayer must also notify it that the ability has returned, in a notice in any form, no later than within this 60-day period. The State Tax Service reminds taxpayers about filing the application and documents.

Official sources

• Tax Code of Ukraine No. 2755-VI: subparagraph 14.1.56⁵; Article 39; paragraphs 44.1, 44.3–44.4, 49.18.1, 49.20, 57.1, 120.1, 124.1–124.3; subparagraphs 134.1.1, 140.5.4, 141.4.1(k), 141.4.2; paragraphs 177.2–177.4, 177.10, 180.2, 186.3(b), 186.3¹, 187.8, 190.2, 198.2, 198.5–198.6; Articles 199, 201, 203, 208; paragraphs 208¹.1–208¹.2, 208¹.6–208¹.7, 292.1, 293.2–293.3; paragraphs 89–90 of subsection 2 and subparagraph 69.1 of subsection 10 of Section XX.
• Law of Ukraine No. 1525-IX on the taxation of electronic services supplied by nonresidents: paragraph 11 of Section I and paragraph 1 of Section II — repeal of subparagraph 141.4.6 of the TCU effective January 1, 2022.
• Law of Ukraine No. 996-XIV “On Accounting and Financial Reporting in Ukraine”: parts 1–2, 5 and 7 of Article 9 — source documents, electronic form, accounting period and retention.
• Ministry of Finance Order No. 88 of 24.05.1995, Regulation on documentary support for accounting entries: paragraph 1.4 — document language and translation.
• Ministry of Finance Order No. 318 of 31.12.1999, NAS 16, “Expenses”: paragraphs 5–7, subparagraph 9.2 and paragraph 19 — recognition of expenses, advances and advertising.
• Ministry of Finance Order No. 1307 of 31.12.2015, Procedure for completing a tax invoice: paragraphs 8 and 12 — invoice prepared by the recipient of a nonresident’s services.
• Ministry of Finance Order No. 21 of 28.01.2016, VAT reporting forms and Procedure for completing and filing them: paragraph 6 of Section I, paragraph 9 of Section III and paragraph 2 of Section VII — calculation filed by a recipient not registered for VAT.
• Ministry of Finance Order No. 225 of 29.07.2022: Sections II–III of the Procedure — substantiating the ability or inability to fulfil tax obligations.