Coefficient 1.08: how indexation of the normative monetary valuation (NMV) will affect land taxes in 2026

For the calculation of tax liabilities in 2026, the land normative monetary valuation indexation coefficient for 2025 will be applied at the level of 1.08. This has been officially confirmed by the State Geocadastre and the tax authorities and signifies another increase in the tax burden on landowners and land users. This coefficient is unified for all categories of land and types of plots, including agricultural ones; therefore, it will affect the land tax and rental payments for state and municipal lands, as well as the single tax of group four payers, consequently influencing the financial models of both the agricultural sector and commercial real estate.

 The normative monetary valuation (NMV) serves as the tax base for most land-related payments: land tax, rent for state and municipal land plots, single tax for group four payers, and is also used in determining the minimum tax liability (MTL). The annual NMV indexation is carried out based on the consumer price index of the previous year in accordance with Article 289 of the Tax Code of Ukraine, and the new coefficient value is applied cumulatively to the results of previous years’ valuations. Therefore, for taxpayers who have not updated extracts from technical documentation on NMV for several years, the actual tax burden may turn out to be significantly higher than expected due to the consecutive application of indexation coefficients for multiple years.

The uniform coefficient of 1.08 for all land plots means there is no differentiation between agricultural land, land for residential and public development, industrial land, and other categories, which simplifies calculations but at the same time deprives local communities and taxpayers of the ability to respond flexibly to sector-specific features. For agricultural producers, this means that the normative monetary valuation (NMV), which is already a key parameter when calculating the tax for group 4 single tax payers and the minimum tax liability (MTL), will be increased once again, which will directly affect production cost and profitability. For owners and users of commercial land under business centers, logistics warehouses, and shopping malls, the increase in NMV due to indexation is transformed into a higher fiscal burden that must be taken into account in budgeting and pricing.

At the same time, it is important to understand that the 1.08 coefficient affects different taxes in different ways and at different times. Thus, the NMV taking this coefficient into account serves as the basis for calculating land tax and rent in 2026, whereas for determining the MTL for 2025, the NMV as of 1 January 2025 is applied, indexed for 2024 (1.12), without taking into account the 1.08 coefficient. An error in distinguishing between periods and coefficients may lead to incorrect calculation of both land tax and MTL, which in turn creates risks of additional tax assessments, fines, and tax disputes. Therefore, taxpayers should clearly separate for which payments and for which period each specific inflation index and the corresponding NMV indexation coefficient is applied.

The introduction of the 1.08 coefficient has not only a purely fiscal effect but also a strategic dimension for business. The increase in the normative monetary valuation (NMV) automatically raises the fiscal burden on an enterprise’s land bank, which may force owners to reconsider the feasibility of retaining low‑efficiency plots or to change the structure of land use. For agricultural companies, this may mean the need to abandon part of low‑productivity land or to seek additional sources of monetization, for example by changing the use profile of a plot or entering into new lease agreements. For developers and owners of commercial real estate, the revision and indexation of the NMV affects the profitability of investment projects, the payback period of construction, and the level of rental rates.

The interrelation between NMV indexation and the powers of local self‑government bodies requires separate attention. Local councils set land tax and rent rates within the limits defined by the Tax Code, but the base for their application is the indexed NMV determined at the central level. This means that even if tax rates remain unchanged, the actual tax burden on taxpayers in 2026 will automatically increase due to the 1.08 coefficient. In communities with large areas of agricultural land, industrial zones, or resort real estate, this may become a significant source of additional revenue for local budgets, while at the same time serving as a factor of tension in relations with taxpayers.

To minimize tax risks, businesses should already now conduct an inventory of their land bank and existing extracts on the normative monetary valuation (NMV). It is necessary to check when the last normative monetary valuation was carried out, which indexation coefficients have already been taken into account in the current value, and how exactly the change in NMV due to the 1.08 coefficient will affect the amount of land tax, rent, and the single tax for group 4 in 2026. It is also advisable to model several tax burden scenarios depending on changes in the area of land plots in use, revisions of rates by local councils, and possible changes in accounting policy.

In practical terms, it is important to ensure proper communication between the finance department, land specialists, and the company’s legal department. Decisions on the acquisition, lease, or disposal of land plots should be made taking into account the current and projected NMV, and not only the market value or the immediate operational needs of the business. Legal advisors can help correctly interpret the provisions of the Tax Code regarding indexation, verify the correct application of coefficients in tax calculations, and prepare arguments in the event of a tax dispute. In particular, this concerns the analysis of decisions of local councils, the relevance of land management technical documentation, the timing and grounds for conducting a new valuation, as well as the assessment of the expediency of challenging NMV results in specific situations.

If you have questions or issues related to the structure of your land bank, the correct application of the 1.08 indexation coefficient, or the calculation of land tax liabilities for 2026, you should promptly seek qualified legal and tax advice.

Author – Svitlana Krutorohova, attorney at the law firm “Legal Company ‘WINNER’”.