Ukraine Introduces 18% Tax on Crypto Profits, 5% Military Levy

Ukraine’s parliament has taken a big step toward regulating digital assets. On Wednesday, the Verkhovna Rada approved the “Crypto Legalization and Taxation Bill” in its first reading, aiming to bring clear rules for crypto taxation and strengthen the country’s digital economy.

Ukraine’s Crypto Legalization and Transaction Bill

The country’s parliament passed the bill at first reading (draft law No. 10225-d) with the impressive support of 246 out of 450 lawmakers voting in favor. The main goal of this bill is to provide clarity in the crypto framework and introduce tax. 

The proposes an 18% income tax and a 5% military tax on digital assets profits. But during the first year after the law comes into effect, a reduced 5% tax rate will apply for converting crypto into fiat currencies. This move is designed to regulate the crypto and bring more transparency into the digital economy. 

Ukrainian MP Yaroslav Zhelezniak announced the update on Telegram and said further amendments will be introduced before the bill’s second reading.

The New Outlook For Crypto Taxation in Ukraine

The bill introduces a separate tax regime for individuals and businesses. For individuals, the tax will be levied on the crypto income, and the amount will be calculated as the difference between annual income from sales and acquisition costs.

Any assets purchased before the law takes effect, a reduced 5% personal income tax (PIT) applies if they are sold in 2026. But activities like issuing, placing, selling, exchanging, or redeeming virtual assets are not subject to VAT. 

The bill also tightens the security measures in crypto. Now, providers offering crypto-related services to Ukrainian residents must register with the supervisory authority and submit annual reports on transactions. Failure to comply will lead to penalties like 10% of the standard fine in 2026 and 25% of the standard fine between 2027 and 2029.

Can Crypto Be Used For Payments in Ukraine?

According to the head of the committee on finance, tax, and customs policy, Danylo Hetmantsev, virtual digital assets are not considered legal tender. So, crypto or any other digital assets cannot be used as an official means of payment. The bill defines virtual assets as a special type of digital property that exists electronically based on distributed ledger technology (blockchain). 

Moreover, the draft law classifies virtual assets into three categories: 

1. Asset-backed tokens: their value is stabilized by being tied to assets such as currency or property.

2. E-money tokens: They are pegged to a single official currency.

3. Other virtual/digital assets: A broad category of tokens that are not included in the first two categories.

This major development could be a turning point in Ukraine’s crypto legislation.