According Order of Ministry of Revenue and Duties of Ukraine № 701, dated  22.11.2013, it was approved as a common rule about taxation of car loans borrowers. Now amount of insurance claims  of fully comprehensive automobile insurance will be object of  income tax, if the insurance company (in the case of insured event) will pay money (insurance claims)  DIRECTLY to the bank . In most cases, according to the terms of the credit and insurance contracts, the insurance company has pay such  compensation to the bank directly.

According to such tax advice "If the amount of compensation in the insurance case with the subject of collateral ( the car ) will be paid by the insurance company directly to the bank , according to Art. 164 of the Tax Code, such money are considered as - taxpayer's income in the form of additional benefits. The bank must do all functions of a tax agent .

This means  that the bank must act like tax agent and must withhold and transfer to the budget  15 - 17 % of the amount of insurance compensation, so the car loans borrower will have to pay  to the  bank the missing part from his own money.

This position is based on  art.165.1.27 of the Tax Code, namely, that the amount of insurance compensation is not included in taxable income only if the insurance company pays compensation directly to individual borrowers , and not to the third party – to the bank. Accordingly, the payment  from the insurance company directly to the bank  - is taxable income.