Ukraine has taken a significant step toward formalizing the taxation of digital assets, with the country’s financial markets regulator proposing a detailed framework for taxing virtual asset transactions. The proposed model includes a standard 18% personal income tax and a 5% military levy, with optional preferential rates of 5% and 9% for certain types of income.

The taxation matrix, published by the National Securities and Stock Market Commission (NSSMC), was unveiled by Commission head Ruslan Magomedov on his official Telegram channel. 

According to a local media report, the proposal aims to bring clarity to the taxation of activities such as mining, staking, airdrops, and token exchanges.

"In the digital age, taxation of cryptocurrencies is no longer a hypothesis – it's a rapidly approaching reality," Magomedov said. "That’s why we have developed a flexible model that adapts international practices to the Ukrainian legal context."

The document offers several methods of determining taxable income, including both net income (after deducting expenses) and gross revenue. 

It allows for different timing of income recognition, such as when assets are received, exchanged, or sold. Notably, only conversions of virtual assets into fiat currency or non-digital assets are treated as taxable events — crypto-to-crypto transactions are excluded under the current proposal.

The NSSMC’s model draws on global precedents, referencing countries like Austria, France, Singapore, Malaysia, and Georgia — all of which have opted for crypto-friendly tax structures or exemptions for certain types of digital asset transactions.

The framework also addresses VAT treatment. While token creation, transfers, and modifications are exempt from VAT, transactions involving the exchange of digital assets for goods and services, or receiving rewards in cryptocurrency, may be subject to VAT. 

However, these may qualify for exemptions under the EU VAT Directive, particularly Article 135(1)(e), which covers services involving payment instruments.

The proposal has already been presented to the parliamentary committee on finance, tax, and customs policy. A draft bill is reportedly in the works.

In a separate development, Kateryna Rozhkova, Deputy Governor of the National Bank of Ukraine, told Interfax-Ukraine that a legislative framework for virtual assets — including the allocation of regulatory authority — is expected by October 2025. The framework will align with the European Union’s Markets in Crypto-Assets (MiCA) regulation, with technical input from international partners.