Personal Income Tax Changes Comes Into Force in Ukraine

New tax amendments with respect to taxation of passive income of individuals are in effect since 1 July 2014 in Ukraine. The Law No.1166-VII “On prevention the financial catastrophe and creation preconditions for economic growth in Ukraine” was adopted on 27 March 2014 by the Verkhovna Rada of Ukraine introducing new legal regulations into the Ukrainian Tax Code.

Most importantly, a progressive scale of taxation on passive personal income (income other than wages) is being implemented in Ukraine for the first time. The following tax rates are now applicable: 15% rate for an annual individual income up to 204 in minimum living wages (approx. UAH 248, 500 or 15,400 EUR), 20% tax rate for amounts up to 396 minimum living wages (approx. UAH 482,300 or 30,000 EUR), and 25% for the upper income brackets above 396 (more than UAH 482,300 or 30,000 EUR). Yet, the new legal norms include some exceptions as well.

The respective scale applies to income such as dividends, royalties, interests and investment income depending on the net amount gained. Moreover, interests from bank accounts, savings accounts, savings certificates, deposits with credit unions, mortgage-backed securities shall also be taxed accordingly. However, the mentioned progressive scale does not apply to the personal income tax levied on wages.

The law requires that the initial 15% of tax due be withheld at the source of payment. Taxpayers are obligated to declare and pay all remaining due tax (according to the scale) at the end of the fiscal year.

If you or your business has questions about Ukrainian tax law or doing business in Ukraine, please do not hesitate to contact us at vienna (at)