Cryptocurrencies and taxation
Today, most Ukrainians can pay for goods with digital assets. In Ukraine, virtual funds can be used to purchase a sufficient number of products: food, pet supplies, clothing, jewelry, fuel, gadgets, travel to other countries, real estate, and more. Therefore, the issue of taxation of cryptocurrency mining in the legal environment is a pressing one, especially for those who are just starting to integrate into the system. Ukraine is one of the top ten countries where virtual payments are rapidly spreading. More than five million Ukrainians own digital currency, which they use skillfully, regularly paying taxes on their income.
State regulation of virtual assets
Many able-bodied citizens are interested in how cryptocurrency income is taxed in Ukraine. The process of regulating virtual assets is constantly changing and improving. The Law of Ukraine "On Virtual Assets", which was approved by the Verkhovna Rada, describes in detail the rights and obligations that digital market participants must comply with.
Taxation of cryptocurrency transactions in Ukraine and globally is carried out in accordance with the securities and stock market legislation. This allows the population to freely carry out transactions to pay for services without having cash. The main points of state management of virtual funds:
- Legal entities must pay 5% of the profit from the sale of tokens, regardless of whether the transaction was carried out through intermediaries or virtual assets. The values that will be negative in the reporting may be recorded in subsequent accounting documents to reduce the tax burden in the future.
- Individuals are required to pay 5% of their profits (according to the Law on Personal Income Taxes) and 1.5% military duty. All transactions for the sale or purchase of these funds should be indicated in the relevant documentation that confirms your legal activity.
- In accordance with the tax regulation of digital funds, an individual entrepreneur must pay taxes on the annual turnover of funds received as profit and from the sale of digital assets. If a sole proprietor is obliged to pay a single tax, he or she must obtain a permit with all the seals that allow him or her to conduct token-related activities on favorable and simplified terms. The payment is made at a rate of 5% and must be supported by up-to-date reporting that reflects the profit from the sale of these funds without taking into account the commission for its acquisition.
Since the regulation of cryptocurrency taxation in Ukraine and the world is only being formed, it is necessary not to waste time and capture as many digital assets as possible. Regular and honest transactions with this type of money will allow you to avoid breaking the law and make a net profit.
Rules for filling out a tax return
In order to file documents for the payment of taxes on income related to the use of digital money, you need to clearly understand the algorithm for filling out the declaration. Today, mining does not have a specific legal status in Ukraine, and there is no regulatory framework and system for regulating operations. If you are wondering how to fill out a tax return on cryptocurrency income, please consider the following important points:
- You should specify the name of the assets in the "Description of the object of right" field. For example, Bitcoin Cash, Bitcoin, Ethereum.
- You should specify the date of purchase of a certain type of asset. If you have made several purchases, indicate the date of the last one.
- You must indicate the exact number of tokens you have purchased that belong to the taxpayer entity or its family members.
- You should calculate the total value of virtual funds of one type in the current reporting period. The amount should be indicated in the national currency. You should also take into account the exchange rate of the National Bank of the country, which was relevant on the last day before submitting the documents.
The current and up-to-date tax payment form, as well as detailed instructions on how to fill it out, can be found on the official website of the Ministry of Finance of Ukraine.
Entrepreneurs working with digital assets need to know how to avoid tax problems when dealing with cryptocurrencies. The most effective way to prevent an offense is to comply with the regulations specified in the Tax Code, regularly declare income and pay taxes on time. If you fail to provide documentation and other reporting on income from the use of web-based funds within the specified timeframe, you should prepare for a fine or, even worse, administrative and criminal liability.