Emergencies and the armed aggression of the russian federation cause businesses in Ukraine to lose inventory damaged or destroyed at logistics warehouses. To reflect these losses correctly in the accounts, avoid tax penalties and preserve the right to future compensation, a company needs to follow a clear sequence of steps.
Specialists from the legal and audit departments of UHY Prostir have prepared a practical algorithm and recommendations for businesses whose goods have been damaged or destroyed by shelling. It is based on an analysis of current Ukrainian tax legislation, the operating rules of the International Register of Damage (RD4U), and hands-on experience of supporting businesses under martial law.
1. Legal documentation of the destruction of property
To confirm that an emergency took place, a company should assemble as complete a package of documents as possible, evidencing the fact, the causes and the consequences of the destruction. This includes:
- A fire report and/or a conclusion on the causes of the fire, drawn up in accordance with the Procedure approved by Cabinet of Ministers Resolution No. 2030 of 26 December 2003;
- Documents from law enforcement authorities — an extract from the Unified Register of Pre-Trial Investigations (URPTI), the scene inspection report, and other criminal proceedings materials where available;
- An extract from the URPTI where criminal proceedings have been opened;
- Official notices from competent state authorities or documents from the military administration regarding the shelling or missile strike;
- Photographic and video evidence confirming the destruction of the logistics facility together with the goods;
- A certificate from the Chamber of Commerce and Industry confirming force majeure circumstances.
2. Supporting documents from the logistics centre
Since the goods were held in storage, it is essential to provide indisputable evidence that they were physically present at the warehouse at the time of the event. The required documents are:
- The lease or safe-custody agreement between the client and the logistics centre;
- Acceptance certificates and consignment notes evidencing the arrival of the goods at the warehouse;
- An official letter or statement from the centre’s management confirming the destruction of the warehouse;
- A copy of the emergency report issued by the State Emergency Service in the name of the custodian or warehouse;
- Inventory results and a detailed list of the client’s destroyed goods, where the logistics centre carried out an inventory count.
3. Inventory count and accounting for destroyed goods
To document the grounds for writing off destroyed goods, a company must carry out its own unscheduled inventory count after the event in which the goods were destroyed or damaged. The internal documentation package includes:
- An order to conduct an unscheduled inventory count in connection with the loss or destruction of goods, specifying the composition of the inventory commission;
- Inventory lists and comparison statements;
- A commission report or conclusion setting out the actual condition of the property, the established causes of its loss, and a conclusion on whether the goods may be written off;
- A write-off certificate listing the item numbers, quantities and carrying values of the goods, the reason for the write-off, and references to the documents confirming the destruction — including documents from state authorities and warehouse documentation.
Accounting entries
For accounting purposes, the write-off of destroyed goods is recorded as: Dr 947 “Shortages and losses from damage to valuables” — Cr 28, 20, 22 (at carrying value).
For corporate income tax purposes, the Tax Code of Ukraine does not provide for any separate tax differences in connection with the write-off of destroyed goods. Accordingly, the tax base is determined solely under accounting rules.
4. Tax risks: writing off goods and preserving VAT credit
The most sensitive area during State Tax Service audits is value added tax.
As a general rule, writing off goods purchased with VAT may raise the question of accruing tax liabilities under clause 198.5 of the Tax Code. However, under clause 32¹ of subsection 2 of section XX of the Tax Code, goods destroyed through force majeure circumstances during martial law are not treated as having been used in non-business activity.
Where proper supporting documentation is in place (a Chamber of Commerce certificate, a State Emergency Service report, a URPTI extract, and primary documents from the warehouse):
- The taxpayer is not required to accrue compensating VAT liabilities under clause 198.5 of the Tax Code;
- No consolidated tax invoice is issued;
- Input VAT credit lawfully claimed on the purchase of the goods is not subject to adjustment solely because the goods were destroyed in these circumstances.
Please note: if, during an audit, a company cannot document the destruction of the goods or their physical presence at the warehouse at the time of the shelling, the tax authority may treat this as non-business use and assess additional VAT.
5. Filing a claim with the International Register of Damage (RD4U)
The International Register of Damage (RD4U), which began operating on 2 April 2024, collects claims for the future international compensation mechanism.
The destruction of goods at a leased or owned warehouse falls under category “C3.1 — Damage to, destruction of or loss of assets”. Within this category, legal entities may claim compensation for:
- Loss of assets (inventory, equipment, premises, real estate, intellectual property rights, cash and others);
- Lost profit resulting from damage to property;
- Total loss of business;
- Other direct costs arising from the damage, destruction or loss of assets, including costs incurred to mitigate the harm.
Filing through the Diia portal
A claim may be filed by the company’s director, whose details are recorded in the Unified State Register, or by an appointed representative using the Digital Powers feature in Diia. The claim must substantiate four key elements:
- Title to the goods (agreements, contracts, financial and tax reporting, statements, invoices);
- The presence of the goods at the warehouse (lease or storage agreement, consignment notes, warehouse documentation);
- The destruction as a result of russian aggression (State Emergency Service reports, URPTI extract, Chamber of Commerce certificate, media coverage, photo and video evidence);
- The amount of damage sustained (calculation of carrying value, invoices, receipts).
UHY Prostir’s recommendation on independent valuation:
An independent valuation of losses under the Methodology of the Ministry of Economy and the State Property Fund No. 3904/1223 of 18 October 2022 is not mandatory for filing the claim itself. It does, however, substantially strengthen the justification of the amount claimed and protects the company against the risk of failing to prove the scale of the damage when the claim is considered on the merits.
Stages of consideration
- Eligibility (Register Board): Sessions are held at least once per quarter. The Board may decide to include the claim in the Register, return it for revision, reject it without prejudice (allowing resubmission once the deficiencies are addressed), or reject it with prejudice (final).
- Consideration on the merits (Compensation Commission): Entitlement to compensation and its amount will be determined by the future International Claims Commission for Ukraine. The Convention establishing it was opened for signature on 16 December 2025. As at August 2026, the Commission has not yet begun work; ratification of the Convention and preparation of its procedures are ongoing.
6. Judicial protection and a note of caution
Court action against the russian federation in a Ukrainian court
UHY Prostir’s specialists additionally recommend considering an action before a Ukrainian court to recover damages directly from the russian federation as the aggressor state. Obtaining a court judgment will serve as significant additional evidence of the fact and the scale of the damage when the case is considered by the Compensation Commission.
Need help documenting losses and handling an RD4U claim?
The UHY Prostir team provides full legal and audit support: from preparing primary documentation and protecting VAT credit through to arranging independent valuation and filing claims with the International Register of Damage.
Authors: Olha Petrukhina, Iryna Blonska
Frequently asked questions
Is VAT payable when writing off goods destroyed by shelling?
No, provided the destruction is properly documented. Goods destroyed through force majeure circumstances during martial law are not treated as having been used in non-business activity — compensating liabilities under clause 198.5 of the Tax Code are not accrued, no consolidated tax invoice is issued, and previously claimed input VAT credit is not adjusted. If the destruction of the goods or their presence at the warehouse cannot be substantiated, the tax authority may treat this as non-business use and assess additional VAT.
Which documents confirm that goods were destroyed at a warehouse?
Two sets of documents are required. External ones — a fire report, law enforcement materials, a URPTI extract, military administration notices, photo and video evidence, and a Chamber of Commerce force majeure certificate. From the logistics centre — the storage or lease agreement, consignment notes and acceptance certificates, an official letter confirming the destruction of the warehouse, a copy of the State Emergency Service report, and inventory results.
How is the write-off of destroyed goods recorded in the accounts?
First, an unscheduled inventory count is carried out under an order from the director, following which the commission draws up a report and a write-off certificate. The write-off itself is recorded as Dr 947 “Shortages and losses from damage to valuables” — Cr 28, 20, 22 at carrying value. The Tax Code provides for no separate tax differences for corporate income tax purposes, so the tax base is determined under accounting rules.
Who can file a claim with the International Register of Damage (RD4U)?
The claim is filed by the company’s director, whose details are recorded in the Unified State Register, or by an appointed representative through the Digital Powers feature in the Diia app. The destruction of goods at an owned or leased warehouse falls under category C3.1 “Damage to, destruction of or loss of assets”, under which a claimant may seek compensation for loss of assets, lost profit, total loss of business, and other direct costs.
Is an independent valuation of losses mandatory for filing an RD4U claim?
Not for the filing itself. However, a valuation under the Methodology of the Ministry of Economy and the State Property Fund substantially strengthens the justification of the amount claimed and protects the company against the risk of failing to prove the scale of the damage when the claim is considered on the merits.
Is there any point in bringing a parallel court action against the russian federation?
Yes. A Ukrainian court judgment awarding damages against the aggressor state serves as significant additional evidence of the fact and scale of the damage when the case comes before the future Compensation Commission.
