Ukraine Proposes Overhaul of Cryptoasset Taxation Framework

The National Securities and Stock Market Commission (NSSMC) of Ukraine has officially introduced a new taxation matrix for virtual assets. The framework aims to establish clear fiscal rules within the digital asset sector.

Published on April 8, the document is intended both as guidance for taxpayers and as a policy tool to help lawmakers shape a cohesive regulatory framework for cryptoassets.

Built on the foundations of European Union best practices, the matrix offers a unified way to classify digital assets, define income and allowable expenses, and assign tax rates — all critical steps in taming the complexity of crypto taxation.

Understanding the Taxonomy Behind Ukraine’s Crypto Matrix

At its core, the new matrix presents a detailed taxonomy of virtual assets, offering what the authors claim is a clear framework for identifying their economic substance.

It divides tokens into several defined categories:

• EMTs (Electronic Money Tokens),
• ARTs (Asset-Referenced Tokens),
• And other forms, such as service-based tokens and decentralized currencies. 

As the NSSMC clarifies, this methodology is designed to unify how digital asset transactions are recorded, regardless of the realization route taken by the asset holder.

The matrix includes comprehensive rules for establishing the moment of income realization and calculating net profit (revenues minus substantiated costs), using either the general tax rate of 18% plus a 5% military contribution, or preferential regimes (5% or 9%) as outlined in Article 167 of Ukraine’s Tax Code.

It also defines criteria for allowable expense documentation and mandates the FIFO method for asset valuation.

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Personal Income Taxation on Virtual Assets

The matrix’s second chapter addresses the taxation of personal income earned through dealings in virtual assets. It evaluates two main approaches: calculating tax liability based on net capital appreciation, or using gross receipts—especially where crypto is exchanged for fiat— as the taxable base.

With tax planning in mind, the matrix zeroes in on how critical documented expenses are in shaping your final crypto tax bill. It flags risks of data tampering in high-volatility tokens and proposes separate frameworks for:

• mining, 
• staking, 
• airdrops, 
• and hard fork-related operations. 

Taxation in the crypto era isn’t a hypothetical anymore—it’s a fast-approaching necessity,” stated Ruslan Magomedov, Chair of the Commission, on his Telegram channel. “The NSSMC’s matrix is a practical tool for regulators to assess their options. As with any framework, each model brings its own pros and cons, and failing to account for these could have serious consequences for the market and for taxpayers.

How VAT Applies to Crypto Transactions: Lessons from Abroad

Section three of the framework focuses on how VAT applies to crypto transactions, aligning with international guidelines. It outlines how conversions—whether between crypto and fiat or between different digital assets—can be subject to VAT treatment.

The matrix cites the landmark EU Court decision (C-264/14), which concluded that exchanging Bitcoin for fiat is exempt from VAT, recognizing it as a financial service.

Borrowing insights from the EU playbook, the Ukrainian draft leans on regulatory precedents from Germany, France, Italy, and Poland.

Germany’s approach is to treat investment and commercial activity as separate legal beasts, while Italy blends VAT compliance into a streamlined declaration process for digital assets. 

The Commission’s proposal takes into account international data-sharing protocols like CARF and DAC8, which aim to make tax processes more transparent and efficient for all parties involved.

Importantly, it also introduces a special transitional policy for crypto assets acquired before the law comes into force. This temporary measure would keep taxes minimal, helping users navigate the legal shift without unfair penalties.

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