Ukraine proposes 18% income tax on crypto earnings, exempting high-frequency trading

Ukraine, one of the most crypto-friendly countries, is tightening tax regulations on crypto. The new digital asset framework includes an 18% income tax plus a 5% military surcharge. 

Ukraine has released a stricter policy matrix on digital assets, based on an 18% income tax with 5% military surcharges. Some categories of crypto will have a preferential tax of 5% to 9%. The new bill is now under consideration by the Ukrainian Rada before implementation. Crypto-owning corporations will still be taxed at 18%.

The new taxation framework was presented by Ruslan Magomedov, head of Ukraine’s National Securities and Stock Market Commission. Ukraine is expected to present a full bill on digital assets in October 2025, potentially modeled after the EU MiCA regulation.

Before the new bill, Ukraine taxes crypto earnings with a flat 18% income tax, and a lower 1.5% military surcharge. The older crypto taxation code differentiated between utility tokens and security tokens, which could also fall under the country’s security law. 

The country is one of the more advanced in terms of crypto adoption, with a global index of 6. Ukraine is thus one of the most crypto-friendly countries in Europe. The Ukranian government also holds 46,352 BTC, the fourth-largest sovereign treasury.

New crypto framework recognizes three crypto asset types

The new crypto framework will recognize a more detailed map of crypto assets. The first group will include stablecoins, pegged to a single cryptocurrency. 

The recognition of stablecoins as a separate asset aims to simplify reporting, as Ukraine intends to avoid the taxation of each and every trade. 

The second group will include asset-backed tokens tied to multiple types of assets. The law recognizes that the owner of an asset-backed token may not be the owner of the underlying stock, commodity, bond, or other asset. The third group includes all other crypto assets with fluctuating value, including NFT. 

Ukraine retains the exit-to-fiat taxation model

The new crypto code recognizes that crypto assets are anonymous and complex, so documenting and reporting each operation is not viable. The country aims to develop simplified declaration models with reasonable taxation based on the ‘fiat exit’ principle. Small-volume traders may receive more favorable taxation. Ukraine also aims to build digital infrastructure to simplify the reporting of income from crypto trades. 

Crypto exchanges are often international and rarely serve as tax agents for the purposes of national reporting. For that reason, Ukraine relies on individuals to file their net income, if it is exchanged to fiat. 

The other major flaw is the lack of documentation for expenses, especially proving mining, airdrop, fees, and other tax write-offs. The new taxation code will simplify reporting only based on the final sale value. This will also allow traders to pay based on their final earnings, instead of taxing profits on paper. 

Ukraine built its new tax framework based on the general EU rule of recognizing tax events. The new taxation framework follows similar implementation in Austria and France, as well as Malaysia, Singapore, and Georgia. 

To further simplify reporting, Ukraine will apply its rule for currency trading to stablecoins. Deals with stablecoins, even if they uncut a small income, are not subjected to taxation. The same may apply to asset-backed tokens based on precious metals. 

The Ukranian tax code allows for expense reporting when buying and selling stocks. However, due to the unregulated nature of crypto trades, reporting expense value may not be reliable. 

The simplified tax rules also mean a trader may not report 100% losses from the buying of risky meme tokens, thus decreasing the final taxable sum to zero. 

Ukraine also aims to model a lower-range limit for crypto trades, where some users are exempt from tax.

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