How to Pay Taxes on NFT Profits in Ukraine: 2024 Complete Guide

Understanding NFT Taxation in Ukraine

As Non-Fungible Tokens (NFTs) explode in popularity, Ukrainian creators and investors must navigate the tax implications of their digital asset profits. In Ukraine, NFT transactions fall under the country’s standard tax framework, with profits treated as taxable income. The State Tax Service of Ukraine (STSU) requires declaration of all NFT-related earnings, whether from sales, royalties, or trading activities. Failure to comply can result in penalties of 25-50% of unpaid taxes plus accrued interest.

How NFT Profits Are Taxed in Ukraine

Ukrainian tax law categorizes NFT earnings under two primary tax types:

• Personal Income Tax (PIT): Applied at 18% on net profits (sale price minus acquisition cost and allowable expenses)
• Military Levy: Additional 1.5% charge on the same taxable base

This creates an effective tax rate of 19.5% for individuals. For example:

• Purchase NFT: 10,000 UAH
• Sell NFT: 50,000 UAH
• Taxable profit: 40,000 UAH
• Total tax due: 40,000 × 19.5% = 7,800 UAH

Step-by-Step Guide to Reporting NFT Income

1. Track All Transactions: Document acquisition dates, purchase prices, sale dates, and associated costs (gas fees, platform commissions)
2. Calculate Net Profit: Sale price minus verifiable costs (original minting expenses count if you’re the creator)
3. File Annual Tax Declaration: Submit Form 1-ДФЛ by May 1st following the tax year
4. Pay Taxes: Settle liabilities by August 1st via bank transfer or Diia portal

Special NFT Tax Scenarios

• NFT Creators: Royalties are taxed as recurring income in the year received
• Frequent Traders: May be classified as entrepreneurs subject to 22% unified tax + VAT if exceeding 1M UAH annual turnover
• Gifts & Airdrops: Market value at receipt is taxable as ‘other income’ at 18%
• Losses: Can offset gains within the same tax year but don’t carry forward

FAQs: Paying Taxes on NFT Profit in Ukraine

Q: Do I pay tax if I hold NFTs without selling?
A: No tax applies until you dispose of the NFT through sale, trade, or monetization.

Q: How are NFT transactions in cryptocurrency taxed?
A: Ukraine doesn’t tax crypto-to-crypto trades. Tax applies only when converting to fiat or using crypto to purchase goods/services.

Q: Can I deduct expenses like gas fees?
A> Yes, blockchain transaction fees, marketplace commissions, and creation costs are deductible when calculating net profit.

Q: What records must I keep?
A> Maintain wallet addresses, transaction IDs, dates, counterparties, and exchange records for 3 years after filing.

Q: Are DeFi platform NFT earnings taxable?
A> Yes, staking rewards or liquidity mining earnings involving NFTs are taxed as income at receipt.

Q: What if I bought NFT before moving to Ukraine?
A> Only profits generated after establishing tax residency are subject to Ukrainian taxation.

Penalties for Non-Compliance

Failure to declare NFT income may trigger:

• 50% penalty on unpaid taxes for intentional evasion
• 25% penalty for unintentional errors
• 0.1% daily interest on overdue amounts
• Criminal liability for violations exceeding 1,500 tax-free minima (approx. 8.1M UAH in 2024)

Staying Compliant with Ukrainian NFT Taxes

Always consult a Ukrainian tax advisor for personalized guidance, especially for complex transactions. Use crypto tax software like Keeper or CoinTracking to automate calculations. Remember that tax regulations evolve rapidly – monitor updates from the STSU website quarterly to avoid surprises.