Taxation of cryptocurrencies in Ukraine
In terms of the use and spread of cryptocurrencies, Ukraine ranks high among other countries. About 13% of the Ukrainian population owns this currency.
As of today, many questions arise regarding the changes made to tax legislation. Modern users expect a lot of clarifications regarding the taxation of cryptocurrencies and the profit from transactions with virtual assets. Are taxes paid on existing virtual currency? What are the payment terms? All points are explained in this article.
Legislation on cryptocurrency taxation in Ukraine
The current legislation of Ukraine does not provide for taxation rules for transactions with virtual assets. There are no clear explanations on how to generate income from transactions with them. This issue needs to be developed and supplemented. However, the absence of a special law regulating cryptocurrencies does not mean that taxes are not required.
After the adoption of significant clauses of the Tax Code, the regulation of taxation of virtual assets will be considered valid.
Thanks to the law, Ukrainian and foreign companies will be able to work openly with crypto assets. This will allow them to open bank accounts, pay taxes, and provide services.
Types of taxes on cryptocurrencies
If a person owns cryptocurrency or virtual assets, this is not a reason for automatic taxation. As of today, cryptocurrencies are not considered currency or currency value. Therefore, it is not the fact of increasing crypto assets that is considered income, but their conversion into virtual funds.
What changes occur after the adoption of the law? Read more about this below:
- reporting of individual entrepreneurs for transactions related to virtual currency will be equal to that of other individuals;
- the income received by a person as a result of the sale of virtual assets should be reflected in the declaration, with a tax rate of 5% (excluding the cost of acquiring assets);
- single tax payers are recommended to be allowed access to transactions related to virtual funds under a simplified system.
The legislation in this area is not yet fully regulated. Therefore, it is better to get advice from a qualified lawyer.
Paying taxes when buying, selling and exchanging cryptocurrencies
Currently, there is no full-fledged regulation of cryptocurrency taxation. Transactions related to crypto assets affect the overall picture of the financial result. How to avoid double taxation? We will discuss this further:
- Individuals. It is recommended that transactions with cryptocurrencies be accounted for separately. This will determine the amount of profit for the reporting year. All of this is filled in the annual declaration. The tax amount is 5% and 1.5% of the military fee.
- Individual entrepreneurs are subject to the general taxation system. The rules apply as to an ordinary person.
- A person who sells cryptocurrency. An income tax return is filed in the amount of the sale price. At the same time, 19.5% of personal income tax and military duty are paid. The costs of purchasing cryptocurrency are not taken into account.
- Legal entities. Corporate income tax payers are advised to keep records of cryptocurrency transactions in accordance with the standards approved by law. The corporate income tax rate is 18%.
Today, income from cryptocurrency transactions is taxed according to the general rules under the current tax legislation.
Tax implications of cryptocurrency mining and staking
There is no special regulation for cryptocurrency mining. It is believed that miners and investors in the cryptocurrency market must declare income from such activities on a general basis.
According to the Tax Code, income earned by private individuals from mining and investing in cryptocurrencies is classified as "other income". They are subject to taxation on a general basis.
Methods of paying taxes on cryptocurrencies
Income received as a result of transactions with virtual assets is subject to personal income tax at the rate of 18%. The military duty of 1.5% of the amount is also taken into account.
Reporting on cryptocurrency taxation
How to file reports? The general tax rules are as follows:
- declaration of income by May 1;
- payment of taxes and military duty to the budget is due by August 1.
Taxpayers are encouraged to file their tax returns online. To do this, you can use the taxpayer's electronic account.
Risks of violation of cryptocurrency taxation legislation
At present, the issue of regulating the taxation of virtual funds remains one that requires clarification and amendments. According to the current legislation, entities that are required to file annual declarations should reflect the cryptocurrency indicator using the section "Intangible assets".