Visit Ukraine - What is known about the legalization of cryptocurrencies in Ukraine and what will be the tax?

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20 Nov. 2023

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What is known about the legalization of cryptocurrencies in Ukraine and what will be the tax?

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What does the new draft law on cryptocurrency legalization provide for?
Cryptocurrency taxes: what will change?

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What is known about the legalization of cryptocurrencies in Ukraine and what will be the tax?

The Verkhovna Rada has registered draft law No. 10225-1 on the circulation of virtual assets in Ukraine. Find out what tax conditions will be in place for businesses operating in the field of virtual assets and what else will change for individuals and legal entities

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In 2022, the Verkhovna Rada of Ukraine passed the draft law No. 3637 "On Virtual Assets", which was supposed to come into force after the amendments to the Tax Code. However, Volodymyr Zelenskyy vetoed it and made a number of amendments. Throughout the year, parliamentarians tried to change tax legislation, but all attempts to do so during the war were in vain.

On November 7, 2023, a new draft law No. 10225 was finally registered in the Verkhovna Rada, but it was widely criticized, and as the head of the Ministry of Digital Transformation Mykhailo Fedorov noted, "to bring the crypto sector out of the shadows, we need to create a special tax regime for this business."

Thus, a new draft law No. 10225-1, which was developed with the support of the crypto business and the Ministry of Digital Transformation, has appeared on the website of the Verkhovna Rada.

"Together with MPs and business, we have developed draft law No. 10225-1 on the circulation of virtual assets in Ukraine. The law will help to create favorable conditions for the development of the crypto industry, increase budget revenues and improve the investment attractiveness of Ukraine," said Mikhail Fedorov.

What does the new draft law on cryptocurrency legalization provide for?

According to Mr. Fedorov, the amendments to the draft law take into account the interests of business and provide for simple and clear tax conditions for those working in the field of virtual assets. In particular, the draft law No. 10225-1:

– defines the legal status of virtual assets;

– classifies digital assets and services in accordance with the European standards for the regulation of cryptoassets (MiCA);

– provides for the creation of a special innovation zone where users will be able to work without prior authorization for three years;

– - takes into account and adapts the FATF recommendations on financial monitoring of the cryptoassets market.

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Cryptocurrency taxes: what will change?

The registered draft law provides for the payment of 5% personal income tax (for the first 3 years), 9% (for the next 5 years) and 18% (to be applied as a general tax rate after 8 years).

At the same time:

● For legal entities, transactions with virtual assets are exempt from VAT (except for service tokens, which will be used to tokenize goods and services).

● For service providers, the income tax will be 18%. However, transactions of service providers related to virtual assets are exempt from VAT (except for those related to consulting services).

● With Diia.City, users will be able to choose between 18% income tax or 9% tax on withdrawn capital.

After registering the new draft law, Mykhailo Fedorov noted that he hopes to help develop new digital industries and have the new draft law supported by the Parliament, because "business support is the foundation of Ukraine's economic growth."

We remind you! Ukraine is among the top 3 countries in the world in terms of cryptocurrency use. Read more about what services allow you to pay with cryptocurrency and what you can buy with it in Ukraine in our previous article.

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FAQ

- - What COVID documents do I need to have with me when entering Ukraine now?
    On July 1, 2023, the Ukrainian authorities lifted the quarantine and other restrictions imposed due to the COVID-19 pandemic. From now on, you do not need to provide proof of vaccination, a negative PCR test result or wear a protective mask to enter Ukraine.
  - Is it safe to visit Ukraine during the war?
    Recently, the number of foreign travelers has increased in Ukraine. They visit the country for various purposes: volunteering, participating in humanitarian programs, filming reports or documentaries, setting up a business, etc. There are currently no cities in Ukraine that are completely safe. And although the main fighting is concentrated in the eastern and southern parts of Ukraine, the entire country is subject to regular rocket attacks.
  - What are your safety recommendations before traveling to Ukraine?
    Here are some important tips:
    • Make electronic copies of all documents and save them on your electronic device so that you always have access to them.
    • Find out in advance the curfew time in the region where you are going.
    • Install the Air Alert app on your smartphone and, upon receiving the signal, immediately go to the nearest shelter. You should also do the same if you hear the corresponding signal on the street.
    • When choosing a hotel, consider the availability of bomb shelters.
    • Inform your family and friends about your route and keep in touch with them.
    • Take out health insurance with extended coverage.
    Do foreigners need to register their stay in Ukraine?
    No, if the period of stay in the country is no more than 90 days. If a foreigner arrives for a period longer than 90 days, in this case, he or she needs a temporary or permanent residence permit, as well as registration at the place of residence.
    Can I enter Ukraine with an expired residence permit?
    Yes. Foreigners (except for citizens of the Russian Federation) and stateless persons have the right to enter and legally stay in Ukraine if they have a temporary or permanent residence permit that has expired or is subject to exchange after February 24, 2022.
    How to enter Ukraine with pets?
    Currently, entry to Ukraine with pets is subject to a simplified procedure. Pet owners must provide the following documents to customs:
    • a veterinary passport of the European standard or a certificate of animal health;
    • proof of valid rabies vaccination;
    • a document on the animal's chipping.
    How do I enter Ukraine with my own car with foreign registration?
    Foreign citizens can import cars with foreign license plates into the territory of Ukraine exclusively for their own use. To cross the border in a car with foreign registration, you need the following documents:
    • foreign passport;
    • driver's license;
    • certificate of registration for the car with valid insurance;
    • international automobile insurance card "Green Card".
    Important: foreign nationals with a residence permit in Ukraine may import a car with foreign license plates for their own use after a written declaration and payment of customs duties.
    What happens to foreigners and stateless persons who are not allowed to enter Ukraine?
    Foreigners and stateless persons who are not allowed to enter Ukraine, when attempting to enter Ukraine at a checkpoint across the state border of Ukraine, do not cross the state border of Ukraine and return as soon as possible to the state from which they came or to the state that issued their passport document. If it is not possible to return a foreigner or stateless person immediately, they stay at the checkpoint across the state border of Ukraine until their return.
    What should I do if I have been banned from entering Ukraine?
    If you become aware of a ban on entry to Ukraine while trying to pass passport control at the border of Ukraine, you should politely ask for a decision to refuse to cross the border, indicating the specific reason for the entry ban. You can appeal the decision to deny entry within 30 days from the date of familiarization with it. It is strictly forbidden to argue with border guards or violate the rules of stay at the checkpoint, otherwise you may be held administratively liable. You should remember the rules of staying at the checkpoint.
  Insurance policy
  Is insurance required to enter Ukraine?
  All foreign citizens are required to have an insurance policy covering the costs of Covid-19 treatment in Ukraine.
  For how long do I have to take out an insurance policy?
  According to the Resolution of the Cabinet of Ministers of Ukraine No. 1236, an insurance policy must be issued for the entire period of stay in Ukraine. The minimum period is not specified.
  Where can I get acquainted with the terms of the insurance contract?
  You can familiarize yourself with the terms and conditions of the insurance contract on our website in the section on insurance policy issuance.
  Is it necessary to buy an insurance policy for children?
  Yes, if a child has foreign citizenship, regardless of age, he or she must have an insurance policy for the entire period of stay in Ukraine.
  I am a foreign citizen, can I buy a policy in Ukraine?
  No, the insurance policy must be presented at the border control.
  What is war risk insurance and what war risks does it cover?
  This policy guarantees monetary compensation in the event of an accident as a result of military operations, passive military risks, terrorist acts, including emergency care, outpatient treatment, hospitalization and repatriation of the insured person (or his/her body in case of death) from the place of stay to the place of his/her permanent residence.
  Who can take out insurance?
  The insurance policy applies to foreign nationals, citizens of another state and stateless persons. There are no age restrictions: minors and people over 70 can buy insurance. In addition, insurance is mandatory for journalists, reporters, correspondents, opinion leaders, and media representatives. This is enshrined in the Law of Ukraine on Insurance (Article 7).
  What is the territory covered by the insurance policy covering war risks?
  The insurance policy is valid on the territory of Ukraine, except for the temporarily occupied territories of Luhansk, Donetsk, Kherson and Zaporizhzhia regions and the Autonomous Republic of Crimea, as well as the territories of direct combat operations (front line).
  Are there any restrictions on the validity period of the insurance policy covering war risks?
  The insurance contract comes into force from the moment the insurance premium is paid in full, but not before the date and time of crossing the state border of Ukraine. You choose the duration of the insurance - it depends on the number of days of your stay in Ukraine.
  I can't pay for the insurance, what should I do?
  If your payment fails, we recommend contacting your bank, as they often do not trust payment systems. You need to confirm that it is you who is making the transaction.
  I have taken out insurance, but I have not received a code. What should I do?
  In this case, we advise you to reload the page, clear the cache, change the language on the page, or use a different browser.
  What should I do if the policy does not arrive at the specified mail for more than 30 minutes?
  Please contact the hotline and provide the data that was specified when applying for insurance.
  Do I need to print out the electronic policy?
  You do not need to print out the electronic insurance policy. It is enough to save it to your phone or tablet to always have access to the document and present it to border control representatives.
  What should I do if I have purchased a policy but my trip is canceled?
  Please inform the portal hotline about the reasons for the trip cancellation and we will be happy to reschedule the dates for you.
  What should I do if I provided incorrect data when applying for an insurance policy?
  You can always contact the portal hotline and we will make the necessary changes to the insurance policy free of charge and promptly.