Ukrainian parliament has introduced new VAT regulations for non-resident e-commerce

On 3rd of June 2021  Ukrainian parliament has introduced new value-added tax (VAT) regulations for non-resident e-commerce businesses that will take effect from 1st of January 2022.  

Currently, non-resident e-commerce businesses that  sells digital goods and services in Ukraine do not have to charge VAT on such sales, therefore, to eliminate this unfair advantage of non-resident e-commerce businesses Ukrainian tax authorities have introduced amendments to current VAT regulations and announced that starting as of 1st of January 2022 VAT will be levied on digital transactions between Ukrainian nationals and non-resident e-commerce businesses if certain thresholds will be reached by such non-resident businesses.

VAT on digital transactions will apply only to non-resident e-commerce businesses whose annual B2C sales in Ukraine exceeds 1 million UAH (approx. – 31.000,00 EUR) per year.

A 20% VAT will be applied to various digital transactions streaming services, games, music, applications, movies, e-books, e-magazines, software, and other online services such as:

  • Subscriptions to electronic newspapers, magazines and books, access to images and/or videos, online libraries;
  • Databases (including search engines and directory services;
  • Access to music applications, video games, TV programs (channels) or movies/series platforms;
  • Cloud services;
  • Software and related updates, remote assistance services;
  • Advertising services on the Internet, mobile applications and other electronic resources, 

advertising spaces.

There are also several exceptions that won’t be affected by new VAT regulations,  this includes:

  • e-books and distance sale of artworks ;
  • online learning services if Internet is used only as a means of communication between the student and the lecturer;
  • Provision of various consultations by e-mail.

Non-resident e-commerce business  will have to prepare a simplified VAT return in Ukrainian or English every quarter and submit it through the electronic portal to Ukrainian tax authorities.

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