In the ongoing war with Russia, Ukraine has taken a big step toward regulating cryptocurrency. The government is now moving to tax cryptocurrency earnings at a hefty 18%, along with an additional 5% military levy. Meanwhile, this proposal, now under parliamentary review, aims to bring clarity to how crypto earnings will be taxed.
How Will the Crypto Tax Work?
Under the proposed tax structure, crypto investors could face an 18% personal income tax along with a 5% military levy. However, a lower tax rate of 5% or 9% may apply under certain conditions.
The new tax model will apply to various crypto activities, including mining, staking, and airdrops.
Investors will be taxed based on one of two methods:
- Net Income Taxation – Total revenue minus expenses will be taxed.
- Gross Revenue Taxation – A fixed tax will apply to all earnings before deductions.
However, there’s a silver lining—crypto-to-crypto trades will remain tax-free, a relief for traders who frequently swap digital assets. This exemption aligns Ukraine with other crypto-friendly nations such as Austria, France, and Singapore, where digital asset swaps remain tax-free.
Interestingly, the government has also made one thing clear that you won’t be taxed just for holding crypto. Instead, taxes will only apply when virtual assets are converted into fiat currency or real-world assets.
VAT on Crypto Transactions
Not all transactions are tax-free. Certain crypto-related activities will be subject to VAT, including:
- Paying for goods and services with crypto
- Rewards for staking or transferring digital assets
- Token modifications that result in new crypto creation
However, some transactions may qualify for VAT exemptions under the EU VAT Directive.
What’s Next for Crypto Regulation in Ukraine?
Ukraine’s finance and tax authorities are now reviewing the bill, with a final decision expected soon. Meanwhile, the National Bank of Ukraine is working on a broader crypto regulatory framework set to launch by October 2025, based on the European MiCA directive.
If this proposal is approved, Ukraine’s tax-free crypto era could come to an abrupt end, forcing investors to rethink their strategies before the tax laws take effect.
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