International VAT Guides – Ukraine

VAT rates in Ukraine 

How much is VAT in Ukraine? 

The Ukraine VAT system is an example of a modern, highly developed, and, on a regulatory basis, similar to the EU-based VAT framework. The State Tax Service is the central fiscal authority.  On July 2, 2021, the Ukrainian Parliament approved the bill introducing a new VAT regulatory framework specifically designed for non-resident digital service providers. 

New rules came into effect on January 1, 2022. New VAT rules apply to foreign providers of digital services and to direct and indirect providers without a permanent establishment in the country.

Non-resident providers of digital services who provide electronic services to natural persons or legal persons who aren’t registered for VAT should register for VAT, and account for VAT on these transactions when the conditions are met. 

The Ukraine VAT regime is mainly based on the: 

• The Tax Code
• Income Tax Act
• Different Guidances, Registration Rules for non-resident digital service providers

VAT threshold in Ukraine 

The simplified registration regime is defined in the amended Tax Code and the Ministry of Finance Regulation, adopted on December 23, 2021, which mandated that non-resident digital service providers register for VAT under the simplified regime. 

The  VAT threshold in Ukraine for overseas providers of digital services is defined in the Tax Code. 

VAT registration threshold for resident businesses: UAH 1,000,000

VAT registration threshold for non-resident businesses: In most cases, there is no registration threshold for foreign businesses with a permanent establishment in the country. 

VAT registration threshold for foreign providers of digital services: UAH 1,000,000

VAT Taxable Activities in Ukraine

Types of taxable activities that trigger mandatory VAT registration:

• Supply of goods and services for consideration;
• Exports;
• Imports of goods and services; 
• Provision of digital services by non-resident digital service providers
• Overseas sales of low-value goods to customers in Ukraine

Tax Representative in Ukraine 

Non-resident digital services providers, in most cases, aren’t mandated to engage a local tax agent for registration or other VAT compliance purposes. 

Tax registration 

Simplified tax registration 

To reduce administrative burden and related compliance costs, non-resident providers of digital services should register for VAT using the simplified tax registration procedure available on the tax portal.

Foreign providers of remotely deliverable services can register for VAT in Ukraine using the simplified registration procedure available in English on the State Tax Service website. 

VAT on Electronically Supplied Services in Ukraine 

Digital Services

The amendment to the Tax Code, which introduced tax registration rules for non-resident digital service providers, came into effect on January 1, 2022. Non-resident digital service providers that reached an annual threshold of UAH 1,000,000 over 12 months should have been registered for VAT by March 31, 2022. (first mandatory registration period based on the retroactive turnover calculation) 

The responsible taxable persons should register as soon as they surpass the fixed threshold. The VAT accountability rises from the registration date. 

How much is VAT in Ukraine for Electronically Supplied Services?

  The VAT rate Ukraine for supplies of most remote services is 20%.

Taxable Digital Services in Ukraine

The following types of digital services trigger mandatory VAT registration of non-resident providers:

• Audio and video streaming services 
• SaaS services
• Intermediation between third parties offering goods or services and those seeking them.
• Travel arranging services

Marketplace and Digital Platform Operators Rules

In specific cases when a local or foreign non-resident digital platform facilitates the provision of remote services, the platform operator has the obligation to register, charge, and collect VAT on these supplies. The platform operator becomes a VAT-responsible party for the underlying supplies on behalf of the underlying suppliers.

Invoicing Rules

A VAT-registered non-resident supplier of remote services isn’t obligated to issue a tax invoice to its customers. The issuance of the simplified tax invoice or sales receipt would be acceptable. 

The minimum requirements of the invoice are the following: 

General information 

• Date of invoice issuance 
• Date and time of supply

Seller information

• Company name
• Full address(head office)
• Billing address if different from company address
•  VAT number

Customer information

• Name 
• Full address
• VAT number(if applicable)

Fiscal Information

• Tax amount for each type of goods or services supplied
• Net value per tax rate
• Distinct line of gross value per tax rate or tax-exempt supply
• Type of the transaction by reference to the categories indicated in the VAT Act 
• Total tax  amount 
• Invoice Total tax exclusive
• The rate of any discount
• Total invoice amount

Foreign Currency Invoice in Ukraine  

In most cases, issuing an invoice in USD or EUR is permitted. The VAT amount, total amount should be converted into foreign currency as well. The VAT return should also be reported in the chosen foreign currency. 

VAT Return in Ukraine 

Simplified return 

Non-resident providers of electronic services that have registered through a simplified form should submit a simplified return. 

VAT Simplified Return

Penalties for late reporting and omitted declarations 

Late VAT return filing, payment, and registration are situations in which taxable persons are most likely to experience the unwanted expense of paying a fine, penalty, and/or interest for failing to comply within the prescribed timeframe. 

Fines and penalties according to the VAT Ukraine Act:

The late registration penalty will probably cover the following:

Non-resident providers of electronic services that make B2C supplies of e-services, without registration for VAT(upon reaching the threshold), will be subject to a fine in the amount of 30 minimum monthly wages as established by the amendment of the Tax Code, which came into effect on January 1, 2022. 

It is calculated on the basis of the average monthly wage connected with the reporting period, for which the foreign vendor should have been registered for VAT. 

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