Ukraine’s Crypto Tax Overhaul

In April 2025, Ukraine’s National Securities and Stock Market Commission (NSSMC) unveiled a comprehensive taxation matrix for virtual assets, signaling a significant shift in the country’s approach to cryptocurrency regulation. The proposed framework introduces an 18% personal income tax on crypto gains, supplemented by a 5% military levy, totaling a 23% tax rate. This initiative aligns with Ukraine’s efforts to harmonize its tax code with the European Union’s Markets in Crypto-Assets (MiCA) regulation, aiming to integrate the nation’s digital asset market into the global financial system.

Taxation Framework and Exemptions

The NSSMC’s proposal outlines a progressive taxation model for virtual assets. Under this framework, profits from converting cryptocurrencies into fiat currency or exchanging them for goods and services would be subject to the standard 18% personal income tax, plus the additional 5% military levy, totaling 23%. Notably, crypto-to-crypto transactions are exempt from taxation, a move that aligns with practices in other European countries, including Austria and France, as well as crypto-friendly jurisdictions like Singapore. This exemption is designed to reduce the tax burden on traders who frequently swap tokens, a common activity in the crypto market.

Investor Identification, Introduction, and negotiation.

Stablecoins, digital currencies pegged to mainstream fiat currencies, are also excluded from the proposed tax. The NSSMC recognizes stablecoins as less susceptible to the volatility associated with other cryptocurrencies like Bitcoin or Ethereum, and therefore not subject to the same taxation. This distinction aims to encourage the use of stablecoins in everyday transactions and foster a more stable digital asset market in Ukraine.

Taxation of Crypto Activities

The proposed framework also addresses the taxation of various crypto-related activities:

• Mining: Considered a business activity, subject to standard taxation rates.

• Staking: Treated as passive income from business, taxed when the crypto is cashed out for fiat currencies.

• Hard Forks and Airdrops: Taxed either as ordinary income or when the tokens are cashed out.

These provisions aim to provide clarity and consistency in the taxation of diverse crypto activities, ensuring that all aspects of the digital asset ecosystem are adequately addressed.

Exemptions and Considerations

The NSSMC’s proposal includes several exemptions to alleviate the tax burden on certain transactions:

• Donations and Transfers Between Family Members: Exempt from taxation to encourage charitable giving and familial transfers.

• Holding Period Exemption: Crypto assets held for a specified period may be exempt from taxation, promoting long-term investment.

However, the NSSMC notes that these exemptions might not apply to non-custodial crypto wallets, highlighting the need for further clarification in the regulatory framework.

Alignment with European Standards

By proposing these tax measures, Ukraine aims to align its regulatory framework with European standards, particularly the MiCA regulation. This alignment is expected to attract international investment, enhance market transparency, and integrate Ukraine’s digital asset market into the global financial system. The NSSMC emphasizes that effective tax policy is crucial in preventing financial abuse and facilitating the legal and responsible use of digital assets.

Industry Reactions and Future Outlook

The proposed taxation framework has elicited mixed reactions from the crypto community. While some stakeholders appreciate the clarity and structure it brings to the regulatory environment, others express concerns about the potential impact of the 23% tax rate on individual investors and the broader crypto market. The exclusion of crypto-to-crypto transactions and stablecoins from taxation is seen as a positive step toward creating a crypto-friendly environment in Ukraine.

The NSSMC’s initiative is part of a broader effort to modernize Ukraine’s economy and foster the adoption of digital assets. The proposal is currently under review, with further discussions anticipated to refine the framework and address industry concerns. As Ukraine continues to develop its regulatory approach to virtual assets, stakeholders await the finalization of the tax code amendments and the implementation of the proposed measures.

References

• Ukraine floats 23% tax on some crypto income, exemptions for stablecoins. Cointelegraph. April 10, 2025. (cointelegraph.com)

• Ukraine’s New Crypto Taxation Plan: 18% Income Tax On Gains. Bitcoinist. April 10, 2025. (bitcoinist.com)

• Ukraine Maps Out First-Ever Crypto Tax Plan, Calls for 18% Levy on Gains. CCN.com. April 9, 2025. (ccn.com)

• Ukraine unveiled cryptocurrency taxation matrix. Incrypted. April 8, 2025. (incrypted.com)

• Virtual assets in Ukraine to be taxed at 18% income tax and 5% military levy or preferential rates of 5% and 9%. Interfax. April 8, 2025. (en.interfax.com.ua)

• Ukraine Proposes 23% Tax on Crypto Gains to Align with EU Regulations. AInvest. April 10, 2025. (ainvest.com)

• Ukraine floats 23% tax on some crypto income, exemptions for stablecoins. G6. April 10, 2025. (gsix.org)

• Ukraine Considers Up to 23% Personal Income Tax on Crypto in Newly Proposed Tax Scheme. CoinSpectator. April 9, 2025. (coinspectator.com)

• Ukraine Proposes 23% Tax on Crypto: Will Cryptocurrency Still Be a “Paradise” in This Country? Anh_ba_Cong on Binance Square. April 10, 2025. (binance.com)

• Ukraine Proposes New Crypto Tax Regime With Up to 23% Personal Income Tax, Stablecoins Exempt. CryptoNinjas. April 10, 2025. (cryptoninjas.net)

• Ukrainian Parliament Proposes Taxing Crypto-Related Profits. CoinDesk. September 17, 2018. (coindesk.com)

• Ukrainian Parliament Proposes Tax Bill for Digital Currencies. Cointelegraph. September 18, 2018. (cointelegraph.com)