Registered a garage cooperative and regulated situation with a non-profit status

A Client contacted our firm to register a garage-construction cooperative in the city of Vyshneve, Kyiv region, within tight deadline in October 2018. Having extensive experience in registration of garage-construction cooperatives in Kyiv, our firm took the work with enthusiasm. The garage-construction cooperative itself (hereinafter referred to as the GCC) as a legal entity was registered within one working day after the Client signed documents prepared by our lawyers. The next step was to obtain a status of a non-profit organization.

At the stage, there were some difficulties. Employees of the local state fiscal service interpreted the law in a different way. For instance, the fact that an organizational and legal form of the garage-construction cooperative is a service cooperative happened to be a new thing for some local employees of tax office. Accordingly it must act in accordance with the Law of Ukraine "On Cooperation". In particular, a principle of a cooperative activity, as a free choice of areas and activities caused distrust from the side of tax officers. They argued about their skepticism that the GCC could decide to engage in commercial activities at any time.

When the case began to evolve in such a way that there was a high risk of non-fulfillment of obligations assumed by the Client, it was necessary to contact the General Division of the State Fiscal service of Ukraine in the Kyiv region and to explain to the higher-level state body, which mistakes have the local tax office. In fact, the above-mentioned principle of activity of a cooperative is stipulated by Article 4 of the Law of Ukraine "On Cooperation". According to Subsection 1 of Section 7 of the Procedure of inclusion to the Register of non-profit institutions and organizations, the inclusion of non-profit enterprises, institutions and organizations to the Register and exclusion from the Register, a non-profit organization must be formed and registered in accordance with the procedure established by the law regulating the activities of such an organization.

Having analyzed the legislation, the General Division of the State Fiscal service of Ukraine in the Kyiv region took our side, and soon a decision on inclusion of the GCC in the register of non-profit institutions and organizations was made. Therefore, we have fulfilled our obligations to the Client to register a garage-construction cooperative, as well as to complete the entire procedure within tight deadline.