Ukraine presents a project on taxing cryptocurrency operations

Ukraine has presented a draft law regulating the taxation of cryptocurrency operations and an updated text of the "Virtual Assets Act" with implemented provisions of the European MiCA regulation, according to the ForkLog publication.

According to the proposed amendments, taxpayers independently determine the overall financial result (profit or loss) from transactions with virtual assets. This indicator refers to the amount of income received from the sale of virtual assets, reduced by their initial cost.

If as a result of the exchange, the taxpayer received not only virtual assets but also funds and/or goods (works, services), the initial value of the virtual assets is their agreed value at the time of such exchange.

If the taxpayer holds multiple virtual assets with different initial costs, their sale is conducted in the order of their acquisition.

The sale of virtual assets is considered to be:

• receiving funds for them;
• payment for purchased goods, works, services, or exchange of virtual assets for them.

The exchange of one virtual asset for another, as well as other operations resulting in the taxpayer receiving only virtual assets, are not considered sales.

Accounting of transactions with virtual assets is kept separately from other income, expenses, and operations with other investment assets.

The investment profit from operations with virtual assets is determined at the time of their sale.

The reporting period is considered to be the calendar year, based on which the taxpayer is required to submit a tax declaration.

A positive value of the overall financial result from operations with investment assets held by the taxpayer for 365 days or less is included in the total annual income of the taxable taxpayer and is subject to taxation at a rate of 18%.

If the overall financial result from the sale of virtual assets has a negative value, its amount is carried forward to reduce the overall financial result in subsequent years until fully offset.

Providers of services related to the circulation of virtual assets must keep and provide information to the tax service about citizens' operations with virtual assets, the amount of income and expenses from such operations.

As we previously reported, on May 16, at a meeting of EU finance ministers in Brussels, 26 EU countries approved the world's first set of rules regulating the use of cryptocurrencies. It is expected that the rules will come into effect from 2024.