The Draft Law on the taxation of income from virtual assets approved by the Parliamentary Committee

Legal relations in the area of virtual assets circulation in Ukraine are governed by the Law of Ukraine “On Virtual Assets” No. 2074-IX (“Law No. 2074-IX”). The Law No. 2074-IX was adopted by the Verkhovna Rada of Ukraine and signed by the President of Ukraine back in 2022. However, it has not yet entered into force, as its enactment is conditional upon the introduction of amendments to the Tax Code of Ukraine that would establish the taxation framework for transactions with virtual assets.

On 24 April 2025, the Committee of the Verkhovna Rada of Ukraine on Finance, Taxation and Customs Policy recommended adopting in the first reading the revised draft Law of Ukraine “On amendments to the Tax Code of Ukraine and certain other legislative acts of Ukraine on regulating the circulation of virtual assets in Ukraine” No. 10225-д (“Draft Law No. 10225-д”).

Among other, the Draft Law No. 10225-д introduces amendments to the Tax Code of Ukraine aimed at implementing tax rules for income derived from virtual assets (cryptocurrencies, tokens, etc.). In particular, the draft law proposes the following taxation rules for individuals:

• The individual’s positive financial result (i.e., profit) received over the reporting year, calculated as the difference between income from the sale of virtual assets [1] (adjusted for exchange rate differences, where applicable) and the amount of documented expenses incurred for the acquisition or creation of such assets (subject to a limited list of allowable expenses), is subject to tax.

• The following types of income are exempt from taxation:

a) income from exchanging one virtual asset for another

b) income from the sale of virtual assets during the year, provided the total amount of income does not exceed the statutory minimum monthly wage

c) the value of virtual assets received as a result of their issuance (creation) or free-of-charge receipt from issuers/in exchange for personal data

• Individuals themselves are required to maintain records of the financial results from virtual asset transactions, separately from other income and expenses, and to declare and pay taxes (if profit is earned) on the aggregate financial result in the annual personal income tax return (due by 30 April of the year following the reporting year). Such profit is subject to 18% personal income tax (the “PIT”) and 5% military levy.
• If the financial result for the calendar year is negative (i.e., a loss), the amount may be carried forward to offset profits from virtual asset transactions in subsequent years until fully utilized.

Additionally, the draft law provides for a transitional period for taxation of income from virtual assets acquired prior to the new law’s effective date. In particular, if such assets are sold during 2026, the respective income of an individual is subject to a reduced 5% PIT rate (5% military levy remains applicable).

It is important to highlight that, under the Draft Law No. 10225-д, exchange rate differences must be taken into account when calculating the financial result from the sale of virtual assets, similarly to the rules applicable to other investment assets. Considering fluctuations of the Ukrainian hryvnia exchange rate, this requirement may result in situations when individuals have to report taxable profits in hryvnia, despite incurring losses in foreign currency.

From an administrative perspective, the Draft Law No. 10225-д requires virtual asset service providers to register with the Ukrainian tax authorities within 60 days of commencing the provision of services to Ukrainian residents, and to submit annual reports on virtual asset transactions involving individuals and legal entities who are Ukrainian residents. Service providers that have rendered services to Ukrainian residents prior to 31 December 2025 must complete their registration by 1 July 2026.

It is noted that the introduction of such reporting obligations represents an initial step towards the implementation of the Crypto-Asset Reporting Framework (CARF) and the EU DAC8 Directive on the automatic exchange of tax information related to virtual asset transactions. As a result, it is expected that the State Tax Service of Ukraine will, in the future, receive information on virtual asset transactions conducted by individuals and legal entities – Ukrainian residents.

The proposed amendments to the Tax Code of Ukraine are expected to enter into force on 1 January 2026. However, it should be noted that the Draft Law No. 10225-д is still at the early stages of the legislative process, and the proposed provisions may be subject to change during parliamentary readings by the Verkhovna Rada of Ukraine.

[1] For taxation purposes, the sale of virtual assets is considered as their sale for monetary funds or any other transactions that involve the transfer of ownership rights to virtual assets in exchange for monetary values and/or in exchange for goods and/or services