Ukraine

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.

Note that the tax authorities may disagree with the applicability of the above-mentioned exemptions to 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 well as 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 and is ether set by the labour contract, approved by a ’collective agreement’ (an agreement between personnel and the employer), or established by the law, within specified limits. The apartment or a house should belong to the employer.
• Premiums paid by an employer-resident in respect of non-state pension and/or voluntary medical 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 2024, the maximum is UAH 21,300). 
• 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 military tax in the amount not exceeding UAH 3,470 per annum for 2022, UAH 3,760 per annum for 2023, and UAH 4,240 per annum for 2024.
• In-kind gifts are exempt from PIT and military tax in the amount not exceeding UAH 1,775 (for 2024). 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).
• Funds provided to individuals or their immediate family members for medical treatment purposes are exempt from PIT and military tax without limitations. The use of the funds for medical purposes must be documented/proven.
• Income provided as funds or goods (including additional benefits) to a taxpayer (and family members of 1st relationship degree) are not included into their total taxable income for 2022 and 2023 year if:
  
  • provided at the expense of budget funds of foreign countries and their state funds, as well as from foreign companies and organisations that, in accordance with the legislation of the relevant foreign jurisdiction, carry out charitable activities, and
  • the person (taxpayer) suffered as a result of the armed aggression of the Russian Federation against Ukraine and exercised the right to temporary protection in accordance with the legislation of such foreign state.
• Income in the form of funds and/or property received as part of the implementation of an experimental project to create favourable conditions for ensuring the effective consumption of electric energy by the population under the conditions determined by the Cabinet of Ministers of Ukraine.

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.