Ukraine Sets 18% Income Tax on Virtual Assets

Ukraine has taken a big step toward formalizing its approach to taxing cryptocurrencies, with the National Securities and Stock Market Commission (NSSMC) releasing a detailed taxation matrix for virtual assets.

The proposal outlines both standard and preferential tax models, signalling a move to align the country’s financial system with global digital asset norms.

Shared publicly on Telegram by Commission head Ruslan Magomedov on Tuesday, the proposal suggests a personal income tax rate of 18% and an additional 5% military levy on virtual asset gains.

Introduced during wartime, the military levy functions as an additional tax to help fund the country’s defense efforts.

Alternatively, the model includes preferential tax rates of 5% and 9% for certain categories. These recommendations draw on international examples and are tailored to fit within Ukraine’s legal framework.

“In the digital age, taxation of cryptocurrencies is no longer a hypothesis – it’s a rapidly approaching reality,” Magomedov said. “That’s why the NSSMC has developed a matrix presenting various taxation options for virtual asset transactions – from mining to airdrops.”

Ukraine is considering a 5-10% tax on crypto income, with legislation expected by mid-2025. The move looks to bolster state revenue while navigating regulatory hurdles.#CryptoRegulations #CryptoTax #Ukrainehttps://t.co/MbtXiYCWi3

The proposed rules define taxable income either as gross revenue or net income after expenses. Income would generally be recognized when received or when assets are exchanged for fiat currency or non-virtual goods and services. Transactions that involve only virtual assets would not trigger a tax under this model.

The matrix references countries with more favorable treatment of crypto activity. Austria and France, for example, do not tax crypto-to-crypto exchanges. Singapore does not levy capital gains taxes on individuals or companies. Malaysia exempts transactions unless they are routine or business-related. Georgia offers full exemptions for individuals on income and capital gains from digital assets.

Reports in February indicated that Ukrainian authorities were working on legislation to introduce a 5%-10% tax on crypto by mid-2025, aiming to boost state revenue and support military funding amid the ongoing war with Russia.

The document also provides tax guidance on mining, staking, airdrops and hard forks. Activities like free token supply, token creation, and storing virtual assets would not be subject to VAT. However, rewards or services that involve token modification or crypto payments for goods and services may be taxed.

Some of these transactions may qualify for exemptions under Article 135 of the EU VAT Directive. This applies especially if they are considered payment-related services. The Commission noted that this classification may need additional interpretation and legal guidance.

Ukraine’s effort to establish a clear tax policy for virtual assets comes at a time of economic strain and heightened interest in digital finance. The Commission has already introduced the matrix to lawmakers and now plans to engage directly with market participants as part of its regulatory development process.

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