Ukraine Proposes 23% Tax on Crypto Income with Stablecoin Exemptions

TLDR

Table of Contents

Ukraine’s securities regulator (NSSMC) proposed taxing crypto transactions at 23% (18% income tax plus 5% military levy)
Crypto-to-crypto transactions and stablecoins would be exempt from taxation
The tax would apply when crypto is converted to fiat or used for goods and services
Options for taxing mining, staking, airdrops and hard forks are being considered
Ukraine legalized cryptocurrencies in 2022 and is working on EU-aligned regulations

Ukraine’s financial regulator has proposed a new framework for taxing cryptocurrency transactions. The National Securities and Stock Market Commission (NSSMC) released the proposal on April 8, suggesting that certain crypto transactions be taxed as personal income at a rate of up to 23%.

The proposed tax would include an 18% personal income tax plus a 5% military levy. This would apply when cryptocurrencies are converted to fiat currency or exchanged for goods and services.

According to NSSMC Chairman Ruslan Magomedov, “the issue of crypto taxes is not a hypothesis, but a reality that is fast approaching.” The framework aims to help lawmakers make an “informed resolution” by considering the advantages and disadvantages of various taxation options.

Key Exemptions Proposed

A major feature of the proposal is that crypto-to-crypto transactions would not be taxed. This approach would align Ukraine with other European countries, including Austria and France, as well as crypto-friendly jurisdictions like Singapore.

The regulator also suggested that stablecoins backed by foreign currencies could either be exempt from taxation entirely or face a reduced tax rate of 5% or 9%. This is because Ukraine’s tax code already excludes income from transactions in “foreign exchange values.”

The framework also addresses other crypto-related activities. Mining could be considered a business activity but might have a general tax-free limit for certain transactions.

Staking could be treated as “business captive income” or only taxed when the crypto is converted to fiat. Hard forks and airdrops might be taxed either as ordinary income or when the tokens are cashed out.

Relief for Small Investors

To protect small investors, the NSSMC suggests a tax-free threshold could help “relieve the burden on small investors” and notes this approach is common in other jurisdictions.

Other possible exemptions include donations, transfers between family members, and holdings kept for a set period. However, the regulator warns these exemptions might not apply to non-custodial crypto wallets.

In a translated letter introducing the potential new approach, Magomedov emphasized that effective tax policy is needed to prevent financial abuse and facilitate the “legal and responsible use of digital assets.”

He added that “establishing fair and understandable taxation rules is also a prerequisite for attracting investment and integrating the Ukrainian virtual asset market into the global financial market.”

Ukraine’s Crypto Journey

Ukrainian President Volodymyr Zelenskyy first signed a law establishing a legal framework for the country to operate a regulated crypto market in March 2022. This determined the industry’s regulators and authorized them to create specific regulations.

Last December, Daniil Getmantsev, head of the tax committee of Ukraine’s parliament, said a draft bill to legalize cryptocurrencies was under review and expected to be finalized early this year.

The National Bank of Ukraine is currently working on a draft law based on the European Union’s Markets in Crypto Assets (MiCA) regulation. Ukraine has been a candidate for EU membership since 2022.

A 2024 analysis from Swiss blockchain analytics firm Global Ledger found that Ukraine could collect over $200 million in annual taxes from crypto transactions.

The proposed tax framework represents a step toward formalizing Ukraine’s approach to cryptocurrency regulation and taxation, balancing the need for revenue with incentives for the growing crypto sector.

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