Currency liberalization continues!

Back in February 2019, the National Bank of Ukraine (NBU) adopted a number of resolutions that introduced a new regime for regulating foreign exchange transactions, which is usually simply called as “foreign exchange liberalization”.

On June 29, 2021, the NBU adopted a new Resolution No. 62, which entered into force on June 30, 2021, which continues to take further steps towards currency liberalization. The Resolution introduces changes to:

  • Regulation on the structure of the foreign exchange market of Ukraine, conditions and procedure for trading in foreign currency and bank metals on the foreign exchange market of Ukraine (Resolution No. 1);
  • Regulation on the implementation of operations with currency values ​​(Resolution No. 2);
  • Regulation on protection measures and determination of the procedure for carrying out certain transactions in foreign currency (Resolution No. 5).

Purchase and sale of foreign currency and purchase-sale-exchange of bank metals for non-cash funds

In accordance with Resolution No. 62, individuals and legal entities are now allowed to perform following operations through banks:

  • purchase by resident and non-resident individuals of cash foreign currency both for cash in hryvnia and for non-cash funds in hryvnia from current accounts of these individuals;
  • exchange of cash foreign currency of one foreign state by resident and non-resident individuals for cash foreign currency of another state;
  • sale to banks by resident and non-resident individuals of banking metals both for cash in hryvnia and for non-cash funds in hryvnia with their subsequent crediting to current accounts of these individuals;
  • purchase of banking metals by resident and non-resident individuals both for cash in hryvnia and for non-cash funds in hryvnia from current accounts of these individuals;
  • purchase by legal entities of coins (bank metals) for non-cash funds in hryvnia;
  • exchange by resident and non-resident individuals of one bank metal for another bank metal with physical delivery or cash in foreign currency.

In addition to banks, through non-banking institutions it is also possible to perform transactions at cash desks, currency exchange offices for the purchase of cash foreign currency by individuals and the sale of cash foreign currency by individuals for cash or for non-cash funds in hryvnia.

Investing abroad

Resolution No. 62 also expands the possibilities for resident individuals to invest abroad. A resident individual can make investments abroad with the participation of a resident securities trader. An individual makes a transfer of funds in foreign currency from his own current account in the bank to the current account (or to the account of accounts payable for settlements in securities for the clients of a securities trader, which is a bank) of a securities trader (opened in the same bank ) with their subsequent transfer to their destination from the current (correspondent) account of the securities trader abroad or to the current accounts of non-resident legal entities opened in Ukraine (except for investment accounts). In this case, the limit of EUR 200,000  must be respected.

List of exceptions for foreign exchange transactions

Resolution No. 62 also expanded the list of transactions to which the limit of EUR 2,000,000 is not applied when carrying out foreign exchange transactions in order to carry out economic activities by residents (legal entities and individual entrepreneurs). Thus, the specified limit is not applied to:

  • operations related to the fulfillment of obligations under guarantees, sureties, pledges, as well as operations to reimburse the resident-debtor of funds to the non-resident-guarantor (surety), which was performed secured by a guarantee/ surety of the obligations of the resident-debtor to the non-resident creditor – the exception applies if transactions related with the fulfillment of the main obligation are included in the list of transactions that are not covered by the specified limit of EUR 2,000,000;
  • operations on reimbursement by the resident-debtor of funds to the non-resident-guarantor (surety), which has performed obligations of the resident-debtor to the resident-creditor secured by a guarantee/ surety;
  • operations carried out on the current (correspondent) account of a securities trader in the event that the securities trader acts on his own behalf (on behalf of an individual), at the insrtuctions and at the expenses of this individual, upon the condition of following the rules regarding established limit for an individual of EUR 200,000.

Thus, the NBU has in a certain way expanded some opportunities for both individuals and legal entities for the purchase and sale of currencies and coins, as well as provided new opportunities for investing abroad.

The full text of Resolution No. 62 can be found at the link:

Will crypto assets be objects of tax amnesty?

On June 15, 2021, the Law of Ukraine, which amends the Tax Code of Ukraine and other legislative acts regarding the introduction of such an instrument as a tax amnesty (hereinafter referred to as the “Tax Amnesty Law”) was adopted. From September 01, 2021 to September 01, 2022, a one-time (special) voluntary declaration will be carried out (hereinafter – “voluntary declaration“).

Voluntary declaration means a special procedure for declaring by an individual the assets that he/she owns, located on the territory of Ukraine or abroad, if such assets were obtained from income that were subject to taxation in Ukraine at the time of accrual (receipt) of such assets and from which taxes and fees have not been paid during any of the tax periods prior to January 01, 2021.

For the purposes of voluntary declaration, assets are monetary assets, property and property rights. Electronic money is also considered as monetary assets (in addition to funds in national and foreign currencies, monetary contributions, rights of claims, bank metals, commemorative banknotes and coins).

In accordance with the Law of Ukraine “On Payment Systems and Transfer of Funds in Ukraine”, electronic money is considered – units of value that are stored on an electronic device and are accepted as a method of payment by other persons, other from the person who issues them, and is a monetary obligation of this person, which is carried out in cash or non-cash form. At the same time, the legislation directly establishes that only a bank can issue electronic money. Accordingly, electronic money cannot mean crypto assets, since activities with crypto assets are carried out directly by individuals or legal entities without the involvement of banks. Thus, in the understanding of the Tax Amnesty Law, crypto assets cannot fall under the category of electronic money.

Considering that the Law “On Virtual Assets” has not been adopted yet, it is natural that the Law on Tax Amnesty does not include the concept of such assets and the possibility of their declaration. At the same time, based on the proposed definitions, crypto assets can be considered as:

  • an asset (from the category of other assets), which was obtained from income that was subject to taxation, but was not declared;
  • income that was subject to taxation in the case of the acquisition of other assets at the expense of crypto assets, or in the case of the sale and purchase of a crypto asset.

Declaration as an asset (other assets)

In this case, a crypto asset may be subject to declaration if it was acquired from income that had not previously been declared. For example, income was received from any commercial activity or dividends were received and were not declared until January 01, 2021, and a crypto asset was acquired from these incomes. Thus, in accordance with the Tax Amnesty Law, if a crypto asset was acquired by means of undeclared income, such an asset can be declared in a voluntary declaration. At the same time, given that the voluntary declaration does not indicate information about the sources through which the asset was acquired, the acquisition of a crypto asset at the expense of undeclared income will not be a prerequisite for voluntary declaration.

At the same time, assets, the total value of which does not exceed UAH 400,000 as of September 01, 2022, will be considered as those from which taxes and fees have been paid in full. In this case, the question arises of how to calculate the total value of a crypto asset (considering that its value changes every day)? In such a situation, based on world practice, it is worth considering the cost of a crypto asset at the time of its purchase. Since, as a general rule, income will be the difference between the initial value of a crypto asset and its value at the time of sale or exchange. So, if the initial cost of a crypto asset was less than UAH 400,000 (about EUR 12 000 or USD 15 000 as of July 01, 2021), and it was not voluntarily declared, then in accordance with the Tax Amnesty Law it will be considered as the asset from which all taxes and fees were paid in full.

However, despite the fact that such an asset can be considered as such from which taxes and fees were paid, the legislation does not prohibit declare it voluntarily, even if its value is less than UAH 400,000. This option is recommended, since there is a high chance that the Law on Virtual Assets will be adopted within this year and additional amendments to the tax legislation in this regard might be introduced. Also, despite the fact that in the legal field the issue of declaring crypto assets has not been settled yet in any way, the practice in this case is ahead of legal regulation, since year by year more and more people’s deputies declare their crypto assets.

If a decision is made to voluntarily declare a crypto asset as another asset, the question of determining the location of the crypto asset also arises, since the application of the tax rate will depend on asset’s location. Since the legislation does not give us a clear answer on how to determine the location of a crypto asset, it would be logical to assume that it is such that it is located abroad (since it is quoted on international exchanges and stored on an electronic wallet with an IP address registered not in Ukraine). Accordingly, the rate of 9% will be applied to such an asset.

Declaration as an income

In the case of declaring a crypto asset as income, the situation looks a little more complicated. In this case, not the crypto asset itself will be declared, but the asset that was acquired at the expense of the crypto asset. For example, during the period until January 01, 2021, a person purchased real estate, and the payment was made at the expense of a crypto asset. In this case, the person decides to declare such property and pay tax. As stated in the law, the basis for calculating the fee from voluntary declaration will be the monetary value of such real estate. Accordingly, the value of the property = the value of the crypto asset at the time of the acquisition of the property. However, in this case, is it possible to consider a crypto asset as income that was subject to taxation until January 01, 2021? In accordance with the explanation of the State Tax Service of Ukraine, the list of taxable income accrued in favor of the taxpayer during the reporting tax period does not include crypto assets, since the only legal currency in Ukraine is the Ukrainian hryvnia.

Taking into consideration all the above mentioned, despite the fact that the Tax Amnesty Law does not directly provides the possibility to declare crypto assets, at the same time, its provisions do not prohibit doing this. Consequently, it seems more logical to conduct a voluntary declaration of crypto assets as other assets at a rate of 9%, as assets that are located outside of Ukraine.

Tax amnesty in Ukraine. What procedure is proposed?

The end of winter 2021 “made a present” to representatives of Ukrainian business  in form of four draft laws under which it is proposed to introduce amendments into Tax code and some other laws aimed at establishment of tax amnesty. However, what is the main aim of amnesty execution? According to research of shadow economy in Ukraine almost 25 per cents of the market is carried out in the shadow. Consequently, the budget does not receive at least a quarter of taxes and levies that must be paid in accordance with legislation.

Tax amnesty foresees the possibility to pay a one-time levy at rates that are lower than those established by law for income taxation, and for which tax payment deadlines have already expired. At the same time, such payers should not be held liable for undue payment of taxes. In order to implement such possibility, it is proposed to introduce a one-time (special) voluntary declaration (or as it is commonly called “zero declaration”). This is a special procedure for the voluntary declaration of assets that belong to a person if they were obtained from income that had to be taxable in Ukraine and from which taxes were not paid during any of the tax periods before January 01, 2021.

The declaration can be submitted both in electronic form and in simple written form. The declaration can be submitted both personally and through an authorized representative (notary) in the form of an impersonal one-time declaration. In case of submission of an impersonal declaration, the declarant draws up and submits personally a declaration in writing and provides it to a notary together with certified copies of documents that confirm that the person has assets from which taxes have not been paid. In this case, an agreement on the submission of an impersonal declaration is concluded between the declarant and the notary, where a special code-identifier of the declarant provided to the notary by the State Tax Service is indicated.

In accordance with draft laws, it is proposed to carry out declaring from July 01, 2021 to July 01, 2022. During this period, declarants can submit declarations, as well as clarifications and amendments to them, if necessary.

Given that the declaration indicates the assets owned by the person, a logical question arises: what will be considered the basis for calculating the levy from a one-time (special) voluntary declaration? The monetary value of the corresponding object of declaration or the nominal value of the monetary claim will be considered as the base. The declarant has to provide documentary evidence of the monetary evaluation of such objects. In the case of submission of an impersonal declaration, documents confirming the value are submitted together with the original declaration and in the future are kept only by a notary. It is important to note that the evaluation has to be carried out in accordance with the laws of the country in which the asset is located. The amount of the levy depends on the location of the asset, and for government bonds the special rate is fixed. Thus, it is proposed to establish the following rates:

  • 5 % – for objects located in Ukraine;
  • 9 % – for objects located abroad;
  • 2,5 % – of nominal value of governmental Ukrainian bonds with a turnover period of more than 365 days without the right of early redemption, and which were acquired by the declarant during the period from January 01, 2021 to June 20, 2022 prior to submission of declaration.

For the purpose of a special declaration, the declarant must place funds in national and foreign currencies in cash and/or in the form of bank metals on current accounts with a special regime of use in banks of Ukraine prior submission a declaration. The bank ensures the placement of funds in a special account after verification of the identity of the declarant and establishment of the source of origin of such assets, which generally contradicts the norm, which states that the declaration does not indicate information about the sources of receipt by the declarant of the objects of declaration.

However, not all assets will be subject to declaration. So, if a person does not use his/her right to submit a one-time (special) voluntary declaration, objects are considered as such for which taxes and levies have been paid in full, if it is:

  • assets, the total value of which does not exceed UAH 400,000 as of the date of the end of the voluntary declaration period;
  • immovable property, the owner of which was the declarant as of the end date of the voluntary declaration period, that does not exceed the following parameters:
  • residential real estate objects – an apartment or property rights to an apartment up to 120 m2, a residential building up to 240 m2;
  • non-residential real estate objects – up to 60 m2;
  • land plots, the size of which does not exceed the free transfer rate in accordance with Article 121 of the Land Code of Ukraine.
  • one vehicle for personal use and transportation of less than 10 persons, the ownership of which was registered in accordance with the legislation of Ukraine as of the date of the end of the declaration period.

The specified assets are not subject to a one-time (special) voluntary declaration fee.

Thus, the above mentioned draft laws offer a sort of compromise option between the state and business representatives regarding filling the budget by returning unpaid taxes at a reduced rate to the state treasury. However, the experience of foreign countries was not always positive, and in some countries, after the tax amnesty, declarants were still held accountable for taxes that were not paid on time.

If you are a business representative or an individual and you are not completely sure on how a tax amnesty can potentially affect your condition, our specialists are always ready to conduct an appropriate analysis and determine the risks that may arise in connection with a tax amnesty and suggest ways to minimize them.

For information regarding services, you can contact by tel. +38 (063) 388 81 20, e-mail:

Cryptocurrencies: purchase and sell, mining, exchange – when the legislative regulation in Ukraine should be expected?

It is not the first year, when lots of countries step by step have been making attempts to legalize various aspects of crypto assets’ activities. At the same time, despite the fact that some countries prohibit the conduct of crypto assets’ activities, in fact, it is almost impossible to prohibit them, since there are many ways to continue carrying out such activities bypassing the established prohibitions. In addition to the above, the legal regulation of receiving income from conducting activities with crypto assets, given the significantly increased cost of cryptocurrencies (in particular, Bitcoin) over the last year, will allow the state to have another source of budget replenishment. A significant number of countries have already adopted the relevant legislative acts, partly or in whole, regulating activities with crypto assets. However, in Ukraine, regulation of this aspect is still on hold.

On December 02, 2020, the Verkhovna Rada of Ukraine in the first reading adopted the Draft Law “On Virtual Assets” and as of the moment the document is being prepared for the second reading. It defines such basic concepts as “virtual asset”, “virtual asset wallet”, “virtual asset key”, “service providers related to the turnover of virtual assets”, “virtual assets’ market participants”, etc.

In accordance with this Draft Law:

A virtual asset is a collection of data in electronic form that has a value and exists in the system of turnover of virtual assets.

A virtual asset can be both an independent object of civil turnover and certify property or non-property rights, in particular, the right to claim other objects of civil rights. At the same time, the Draft Law explicitly states that virtual assets are not a means of payment within the territory of Ukraine.

The subject of entrepreneurial activity that carries out one or more types of activities with virtual assets established by law in favor of third parties is considered as a provider of services related to the turnover of virtual assets and is subject to mandatory state registration. These types of activities include:

  • storage or administration of virtual assets and virtual asset keys;
  • exchange of virtual assets;
  • transfer of virtual assets;
  • participation and provision of financial services related to the issuer’s offer and / or sale of virtual assets.

In addition to the mandatory registration, the provider of services related to the turnover of virtual assets must also meet certain requirements, namely:

  • impeccable business reputation of the director and participants;
  • disclosure of information about the ownership structure (including information about the ultimate beneficiaries or their absence);
  • developed and implemented internal procedures of financial monitoring;
  • developed and implemented rules of the processing of personal data.

If an individual or a subject of entrepreneurial activity does not carry out these types of activities in favor of third parties, then such activities are not considered as the provision of services related to the turnover of virtual assets and are not subject to mandatory registration.

In accordance with the Draft Law, the Ministry of Digital Transformation of Ukraine within 30 days decides to conduct state registration of the activities of a provider of services related to the turnover of virtual assets and include information about it into the State Register of providers of services related to the turnover of virtual assets, or decides to refuse such registration. The validity period of state registration is unlimited.

At the moment, consideration of the Draft Law of Ukraine “On Virtual Assets” is not on the agenda of the Verkhovna Rada of Ukraine. However, new draft laws on the regulation of activities with crypto assets have not yet been submitted for consideration.

And what about taxes?

Much earlier (back in November 2019), the Draft Law of Ukraine “On Amendments to the Tax Code regarding the taxation of transactions with crypto assets” was submitted for consideration. The main idea of ​​this Draft Law is to designate the profit from operations with crypto assets as a positive difference between the income received by the tax payer from the sale of crypto assets and the costs related to their acquisition and/or creation. As a general rule, it is proposed that such profits will be the basis for applying the general income tax rate of 18% (+ 1.5% military duty). At the same time, it is proposed to establish a 5% rate for taxing investment profits from the sale of crypto assets for a period of 5 years.

It should be noted that despite the fact that the Draft Law was never adopted, the rules specified in this document on the taxation of profits derived from activities related to crypto assets are already applied in practice. Thus, the designated profit is taxed at a general rate of 18% (+ 1.5% military duty) and falls under the category of “other income”.

Therefore, individual entrepreneurs engaged in cryptocurrency mining are usually on a simplified taxation system and pay 5% tax on the income received. However, this approach is quite risky, since in practice, individual entrepreneurs were excluded from the Register for conducting activities that were not included in the list of activities in which they are engaged.

Thus, at the moment there is a legal conflict, when, on the one hand, there are incomes received from activities with crypto assets, and on the other hand, there is no legal regulation of the issues of declaring and taxing such incomes. So, as it was indicated, some entrepreneurs are trying to declare their income received from activities with crypto assets and pay taxes, and in return have risks of exclusion from the Register for conducting activities outside the law.

Some entrepreneurs and individuals who want to conduct business with crypto assets within the legal framework sometimes also consider options for obtaining residency in jurisdictions where such activity is legally regulated.

For information regarding obtaining legal advice on conducting activities with crypto assets in Ukraine or choosing a jurisdiction for conducting a crypto business, you can contact by phone. +38 (063) 388 81 20 or e-mail: