Ukraine

Individual - Income determination

Last reviewed - 30 June 2022

Employment income

All income received from employment in monetary form or in kind during a calendar year is subject to PIT. This includes all basic pay, overtime pay, supplemental pay, awards and bonuses, compensation for unused vacation, all other monetary amounts, and additional benefits granted by employers to employees.

Taxable income of foreign nationals who are residents of Ukraine is determined in the same order as for Ukrainians.

Income from disposal of property

Proceeds from the sale of real estate (a house, a flat, or a share of such a house/flat/cottage, or an unfinished construction of such asset) is exempt from taxation if it is the first disposal for the year and the asset was in the individual’s possession for more than three years (the latter condition does not apply to sales of inherited property). A 5% rate (for tax residents) and 18% rate (for tax non-residents) apply to subsequent sales of immovable property during the calendar year. Commercial property does not qualify for the aforementioned exemption. The tax must be paid before notarisation of the sale-purchase agreement. See 2021 tax legislation valid since 1 January 2022 in the Significant developments section for recent amendments.

Proceeds from sales of movable property are generally taxed at 5%. One sale per calendar year of a car, a motorcycle, or a scooter is exempt from taxation. A 5% rate applies to the second sale of such assets during a calendar year for tax residents, an 18% rate applies to the third and subsequent sales during the same calendar year. An 18% rate applies to incomes from the disposal of movable property received by tax non-residents. In addition, the 1.5% military tax applies to such income if it was taxed with PIT.

Dividend income

Dividends received from a Ukrainian legal entity CIT payer (other than a collective investment arrangement) are subject to PIT at a 5% rate. Dividends paid by non-residents, mutual investment funds, and non-payers of CIT in Ukraine are taxed at 9%, as are distribution of profits, including accumulated profits from previous periods, from foreign formations without the status of a legal entity (starting from 2022).

Dividends that are 'not ordinary' are taxed at 18% PIT.

In addition, the 1.5% military tax applies to such income (as well as any other income taxable with PIT).

Interest income

Bank interest, as well as most other passive income, is subject to 18% PIT starting from 1 January 2016. In addition, the 1.5% military tax applies to such income.

Banks and credit unions are required to withhold PIT and report to the tax authorities the total amount of interest income and tax withheld during a given period without providing any information on the individuals or their bank accounts.

Exempt income

Generally, all income received or accrued for the taxpayer (or paid to third parties for the benefit of the individual) in any form is taxable, with some minor exceptions:

  • Accommodation provided by an employer to an employee free-of-charge, if its provision is an essential condition for the performance of an employee’s labour function, or if it is approved by a ’collective agreement’ (an agreement between personnel and the employer), or if it is established by the law within specified limits. The apartment or a house should belong to the employer.
  • Premiums paid by an employer in respect of non-state pension and/or voluntary medical insurance insurance of its employees within a limit equal to 30% of the employee’s monthly salary
  • Amounts paid by legal entities or individuals to Ukrainian specific educational institutions for the taxpayer's education and training/retraining, within specific limits and conditions. The maximum monthly exemption is three times the minimal salary set as of 1 January of the reporting year for every completed or partially completed month of such education (starting from January 2022, the maximum is UAH 19,500). The labour relations and obligation of the employee to work three years for the respective employer after the completion of education no longer apply.
  • Alimony received from residents or non-residents.
  • Interest income from current bank accounts that is used solely for the receipt of salaries, scholarships, pensions, social aids, and other social payments received by individuals.
  • Interest from securities issued by certain state bodies of Ukraine.
  • Shares received from the capitalisation of undistributed profits, provided that allocation of shares between shareholders of the Ukrainian resident entity remains unchanged.
  • One-off material aid may be exempt from PIT and MT in the amount not exceeding UAH 3,470 (for 2022) p.a.
  • In-kind gifts are exempt from PIT and MT in the amount not exceeding UAH 1,625 (for 2022) – application of the limit may require developing an approach by the company (if it is monthly, annual or for each gift as legislation is not clear).
  • Exempt from PIT and MT without limitations funds provided to individuals or their immediate family members for medical treatment purposes, the use of the funds for medical purposes must be documented/proven. USC exempt also.

The USC made by an employer per Ukrainian tax legislation is not included in the taxable income of the individual. Contributions made to foreign pensions and/or social security funds are considered as an individual's additional taxable income.