Legalisation of cryptocurrencies in Ukraine

The Verkhovna Rada of Ukraine is preparing to vote on a bill that will legalise cryptocurrency and establish principles for the taxation of crypto assets. The key issue sparking fierce debate is the tax rate for holders of digital assets.

What tax model is being discussed?

Representatives of financial institutions and MPs are proposing different taxation options:

• Lenient option: Taras Kozak, a member of the Strategic Group at the National Securities and Stock Market Commission, states that Ukrainians are ready to pay no more than 5% of income derived from cryptocurrency operations.
• Strict option: Daniil Hetmanets, head of the Verkhovna Rada committee on finance, tax and customs policy, proposes standard taxation:
  • 18% personal income tax;
  • 5% military levy.

Thus, under Hetmanets' scheme, the total tax burden would amount to 23%, making Ukraine one of the countries with the highest cryptocurrency taxation in the world.

The problem for early investors

Particular concern is raised by the provision on the taxation of previously acquired assets. According to the proposal, if cryptocurrency was purchased before the law enters into force, owners will pay tax not on the profit, but on the total value of the asset. This is because proving the origin of funds will be practically impossible.

When to expect the first tax payments?

According to optimistic forecasts, the tax on cryptocurrency assets will enter into force in 2026. However, lobbyists for strict taxation are trying to accelerate the law adoption process, which could lead to tougher conditions for investors.