Ukraine to tax profits from cryptocurrencies: draft law passes first reading

At a meeting on Wednesday, the Verkhovna Rada adopted as a basis the draft law No. 10225-d on amendments to the Tax Code to regulate the turnover of virtual assets in Ukraine. This was reported by its initiator, the head of the Tax Committee, Danylo Hetmantsev.

246 MPs voted in favor of the draft law that establishes rules for taxation of transactions with virtual assets (not only cryptocurrencies, but a wider range of digital things: these can be asset-linked tokens, e-money tokens, and other tokens).

First Deputy Chairman of the Tax Committee Yaroslav Zheleznyak warned that the draft law will undergo many changes before the second reading, so he personally "does not see the point in writing a long description of what it is about.".

In its current version, the draft law provides for the introduction of taxation of profits from transactions with virtual assets (in the form of the difference between sale and purchase) at a rate of 18%. Exchanges between cryptocurrencies and sales of up to one minimum wage, as well as virtual assets received as a result of issuance or free of charge from issuers will not be taxed.

For assets acquired before the law came into force, a preferential rate of 5% will be applied when sold in 2026. If the taxpayer does not exercise this right, such income will then be taxed on a general basis.

Taxpayers will have to keep records of the financial result from transactions with virtual assets separately from other income and expenses.

Providers of services related to the turnover of virtual assets will be required to register with the relevant state authority and submit a report on transactions with virtual assets annually by January 31. The draft law establishes penalties for failure to submit or late submission of an application for registration, as well as for failure to submit or late submission of a report.

The current version of the draft law stipulates that the new rules will come into force on January 1, 2026.

• In February 2022, the Verkhovna Rada adopted Law No. 2074-IX "On Virtual Assets". It has not yet started functioning, as it required amendments to the Tax Code to come into force, which the parliament did not do.
• Now is working on an updated draft law on virtual assets. Regulation in Ukraine, which will also cover the crypto industry, will be based on European MiCA regulations .