Income Tax in Ukraine
Ukraine operates a flat personal income tax (PIT) system with an 18% rate plus a 1.5% military levy, giving an effective rate of 19.5%. This guide explains how personal income is taxed, available deductions, and filing requirements.
Tax Residency
An individual is considered a tax resident of Ukraine if they meet any of the following criteria:
- Spend more than 183 days in Ukraine in a calendar year
- Have their permanent residence in Ukraine
- Have their center of vital interests (economic and personal) in Ukraine
Resident individuals are taxed on their worldwide income. Non-residents are taxed only on Ukraine-source income.
Personal Income Tax Rates (2026)
Ukraine uses a flat personal income tax system:
| Income Type | Rate |
|---|---|
| Employment income | 18% PIT + 1.5% military levy = 19.5% |
| Individual entrepreneurs (Group 3 simplified) | 5% of turnover |
| IT freelancers under Diia City | 0% PIT (5% on distributed profits) |
| Capital gains (securities held >1yr) | 0% |
| Capital gains (short-term) | 18% + 1.5% = 19.5% |
Military Levy
A 1.5% military levy (Viyskovyy zbir) is applied on most types of income, including employment income, self-employment income, and certain investment income. This brings the effective PIT rate to 19.5%.
Deductions and Allowances
Tax Social Benefit
- General allowance: 100% of living wage for able-bodied persons
- Increased allowance: 150% for single parents, widows, and certain categories
- Maximum income threshold: 1.4x living wage to qualify
Other Deductions
- Mortgage interest: Deductible for qualifying housing loans
- Education expenses: For taxpayer and dependents
- Medical expenses: Certain medical and dental costs
- Charitable donations: To approved organizations
- Insurance premiums: Life insurance and pension contributions
Employment Income
Employment income includes salaries, wages, bonuses, commissions, and benefits in kind. Employers are required to withhold PIT (18%) and military levy (1.5%) from employee salaries and remit them monthly.
Self-Employment and Business Income
Self-employed individuals and individual entrepreneurs (FOP) are taxed under different regimes:
- General system: Net income at 18% PIT + 1.5% military levy
- Group 3 simplified system: 5% of turnover (plus 1.5% military levy)
- Diia City: 0% PIT for IT specialists (5% on distributed profits)
Filing Requirements
- Annual Tax Return: Due by May 1 of the following year
- PAYE Returns: Monthly, by the 20th of the following month
- Property Declaration: Annual declaration of assets and income
Penalties
- Late filing: 10% of tax due, plus 0.5% per month of delay
- Late payment: Penalty based on NBU discount rate
- Understatement: 25% of understated tax (50% for repeat offenses)
- Fraud: Up to 100% of tax evaded, plus criminal prosecution