You can find previous guidance, including details on the accounting rules for residential buildings as family-type children’s homes (FTCH), here: Residential Buildings
The write-off of municipal property must be agreed with its owner or the local self-government body (hereinafter the LSG) authorised by the owner. For this reason, the relevant village/settlement/city council should adopt its own Procedure for the Write-off of Municipal Property, which sets out the procedure for its write-off, the approval process, and the valuation criteria for approving its write-off.
Take a look at the procedure for writing off municipal property transferred to budgetary institutions under the right of usufruct.
Who decides on the write-off of municipal property?
The answer can be found in the Law of Ukraine “On Local Self-Government in Ukraine” No. 280/97-ВР dated 21 May 1997 (hereinafter the Law on LSG).
The right of municipal ownership is the right of a municipality to own, use and dispose of property belonging to it — either directly or through local government bodies — in a prudent, economical and efficient manner, at its own discretion and in line with its best interests (Art. 1(15) of the Law on LSG).
Hence, only the relevant local council is authorised to dispose of municipal property, regardless of whether the property was transferred for use under the right of operational management prior to 17 August 2025 or under the right of usufruct of municipal property from 28 August 2025 onwards.
The management of municipal property specifically involves making decisions regarding the transfer of property for use or lease, its disposal and its write-off (liquidation). The law stipulates that approval for the write-off of municipal property does not hinge on the legal grounds on which it was transferred for use.
The powers to manage municipal property fall within the exclusive remit of the executive bodies of village, settlement and city councils — within the limits set by the council in respect of assets falling under the municipal ownership of the relevant municipality (Art. 29(1)(a) of the Law on LSG).
Decisions regarding the delegation of specific powers to other bodies for the management of assets falling under the municipal ownership of the relevant municipality, as well as the definition of the scope of these powers and the conditions for their exercise, may only be taken at plenary sessions of village, settlement or town councils (Art. 26(1)(31) of the Law on LSG).
The Procedure for the Write-Off of State-Owned Assets is set out in Resolution 1314 of the Cabinet of Ministers of Ukraine dated 8 November 2007. The Procedure for the Write-Off of Municipal Property, which regulates its write-off by budgetary institutions and approval by the authorised local government body, must be approved by a decision of the village/settlement/city council (the Ministry of Finance also holds this view in its Letter No. 05230-16/23-1794/1/1556 dated 10 May 2017).
Thus, both the Procedure for the Write-Off of Municipal Property and the decision to write off (dispose of) municipal property may only be adopted by its owner (the municipality, represented by the village/settlement/city council) or by a body authorised by it.
Why the Procedure for the Write-Off of Municipal Property needs to be updated
This is primarily due to a series of legislative changes and the imposition of martial law, as well as the destruction and damage to municipal property resulting from the armed aggression. Furthermore, a budgetary institution’s accounts may currently include assets transferred either under the right of operational management or under the right of usufruct of municipal property.
Village, settlement and city councils should therefore update their Procedure for the Write-Off of Municipal Property. There are several good reasons to do so.
Firstly, National Regulation (Standard) of Accounting in the Public Sector NP(S)BODS 121 (Fixed Assets) defines fixed assets as those recorded in Account 10 (Fixed Assets) and Account 11 (Other Non-Current Tangible Assets).
Following the removal from NP(S)BODS 121 (Fixed Assets) of the cost threshold for recognising assets as low-value non-current tangible assets (hereinafter LVNCTA), budgetary institutions were required to review their accounting policies.
As of now, most public sector organisations have set this financial threshold at UAH 20,000. In other words, according to accounting policy, a table with an initial cost of UAH 8,000 may be classified as a fixed asset in one public sector organisation, but as a low-value non-current tangible asset in another. The primary administrator, with whom the budgetary institution’s accounting policy is agreed, must ensure a consistent approach to the valuation criteria for recognising an asset as a fixed asset.
Therefore, the procedures for writing off municipal property should specify, among other things, the following:
- What is meant by “fixed assets”;
- Whether the write-off of other tangible assets requires approval;
- Whether it matters for approval purposes if a non-current asset has been fully depreciated or not;
- Whether the value is based on the initial or carrying amount;
- Cases where municipal property may be written off by decision of the head of the budgetary institution.
Secondly, given that, amid the ongoing war, budget institutions face the destruction or damage of property on an almost daily basis, it is necessary to establish the procedure, process and specific requirements for writing off municipal property that has been damaged or destroyed as a result of the armed aggression.
Please note that several amendments have been made to the Procedure for the Write-off of State-Owned Assets, approved by Resolution of the Cabinet of Ministers of Ukraine No. 1314 dated 8 November 2007, in the past year alone. We therefore recommend that you take these changes into account, at least in part, when updating the procedures for writing off municipal property.
Thirdly, the usufruct of municipal property is the right to personal, free-of-charge possession and use of municipal property. However, the local council (LSG) may impose additional conditions on the ownership and use of municipal property.
In accordance with Art. 60-1(7) of the Law “On Local Self-Government in Ukraine”, the usufruct of municipal property shall be terminated, inter alia, in the following cases:
- Termination of the usufructuary due to its liquidation;
- Destruction or loss of the property subject to the usufruct of municipal property;
- Deterioration of the condition of the property subject to the usufruct of municipal property, rendering it unfit for its intended use;
- Adoption by the authorised local self-government body of a decision to terminate the usufruct of municipal property established for an indefinite period.
The Procedure for the Transfer of State-Owned and Municipal Property under the Right of Usufruct and the Oversight of the Use Thereof was approved by Resolution of the Cabinet of Ministers of Ukraine No. 1103 dated 8 September 2025 (hereinafter Procedure 1103).
Pursuant to Clause 16 of Procedure 1103, if an inspection reveals that the condition of the property has deteriorated, the managing authority may decide to terminate the usufructuary’s right of usufruct over the municipal property, demand reimbursement for the lost property or determine the measures that the usufructuary must take to ensure the effective use of the property.
Additionally, the usufructuary is required to submit an annual Report on the Use of Property, the form for which is set out in the annex to Procedure 1103.
This Report contains details on, amongst other things, the technical condition of the property; the costs of its upkeep and maintenance, routine and major repairs, as well as damage, destruction and other circumstances affecting the condition of the property.
An analysis of the Report in question shows that oversight of the use of municipal property under the right of usufruct is stricter than it was under the previously granted right of operational management.
This means that local councils may impose stricter conditions on the disposal of municipal property transferred under the right of usufruct, and may also stipulate cases in which the usufructuary must reimburse any damage to or loss of the property.
For example, the local council may stipulate that the write-off of fixed assets must be approved by it, regardless of the asset’s original cost and whether 100% depreciation has been accrued. In other words, these matters fall exclusively within the remit of the relevant local council.
Thus, decisions regarding the write-off of property transferred under the right of usufruct are made exclusively by the relevant local councils or by the executive bodies authorised by them. The issue of approving the write-off of municipal property transferred under a right of usufruct may be resolved by amending the current Procedure for the Write-off of Municipal Property.
