Ukraine Proposes 23% Tax on Crypto Gains to Align with EU Regulations

Ukraine is considering a new tax regime that would impose up to 23% personal income tax on crypto gains. The proposal, led by the National Securities and Stock Market Commission (NSSMC), aims to harmonize the country’s tax code with the European Union’s Markets in Crypto-Assets (MiCA) regulation and generate more state revenue amidst wartime economic pressures.

The new tax regime, detailed in a taxation grid released by the NSSMC, suggests a progressive taxation model where crypto income would be taxed between 18% and 23%. Notably, stablecoins are exempt from this tax, as they are not considered speculative assets. This exemption recognizes stablecoins as digital currencies pegged to mainstream fiat currencies, making them less vulnerable to the volatility associated with cryptocurrencies like Bitcoin or Ethereum.

The proposed framework includes several key points to guide policymakers in developing a regulatory framework for digital assets. These points include a single method of crypto pricing, likely based on market prices at the time of transaction, to prevent tax evasion by underreporting of gains. The tax would apply to both individuals and legal entities, including Ukrainian residents and potentially foreign actors engaged in crypto trade within Ukraine.

The motivation behind this move is to bring clarity and consistency to the taxation of crypto, an area that remains legally ambiguous in many jurisdictions. By adopting MiCA-based standards, Ukraine aims to integrate more closely with the European Union and ensure compliance with harmonized rules for crypto assets within the EU.

The Ukrainian crypto community has reacted with a mix of wariness and skepticism. Some investors and exchanges have expressed concern that a 23% tax rate could stifle innovation and drive crypto activity underground. They argue that a lower tax rate would be more effective in encouraging voluntary compliance and sustaining the nation’s growing digital economy.

One Ukrainian crypto entrepreneur commented, “We see the NSSMC’s approach as a step toward transparency, but it needs to be balanced. The key question is whether the government will provide fair rules that allow the crypto industry to thrive while still contributing to the national budget.”

The exemption of stablecoins from the taxable assets is a significant feature of the proposal. The NSSMC views stablecoins as value-saving instruments, particularly in volatile or inflationary economic environments. This distinction can help differentiate between the use of crypto for investment and its use for remittances and payments. By excluding stablecoins, Ukraine joins a growing list of governments that treat them distinctly from other cryptocurrencies, potentially fostering greater use of regulated stablecoins in everyday transactions and bridging the gap between traditional and decentralized finance.