Ukrainians living abroad are increasingly interested in the issue of taxation of their incomes. In the conditions of war and economic changes, many of our fellow citizens continue to work remotely or find new opportunities for employment outside the country. At the same time, the question of their tax obligations to Ukraine, as well as possible consequences in case of non-compliance with the requirements of the law, remains open. The State Tax Service of Ukraine recently published clarifications on the procedure for paying taxes on foreign income, mechanisms for avoiding double taxation, and features of filing a tax return. Let’s consider these questions in more detail.
The main taxes that must be paid
In accordance with information According to the State Tax Service of Ukraine, if you are a citizen of Ukraine and receive income outside the country, you must declare these funds and pay the appropriate taxes. In accordance with current legislation, income received abroad is subject to taxation in Ukraine at the following rates:
- 18% – personal income tax (PIT);
- 1.5% – military levy (valid only for income received before January 1, 2025).
If your income was calculated in a foreign currency, the amount for taxation is converted into hryvnias at the official exchange rate of the National Bank of Ukraine on the day the funds are received.
How to avoid double taxation
One of the most important aspects of taxation of foreign income is the issue of avoiding double taxation. Ukraine has agreements on avoidance of double taxation with many countries. If you have paid taxes in the country where you receive income, then in Ukraine you will not have to pay them again, but there are certain conditions:
- Obtaining a certificate of payment of taxes in a foreign country. It must be issued by the tax authorities of that country.
- Legalization of the certificate – in some cases, the document requires official certification at the consulate or other relevant authorities.
- Crediting of paid tax – in Ukraine, only the amount of tax that does not exceed the amount that would be payable in Ukraine is taken into account. For example:
- If you paid a tax of UAH 100,000 abroad, and you need to pay UAH 80,000 in Ukraine, then no tax is paid in Ukraine.
- If you paid 80,000 UAH abroad, and in Ukraine you have to pay 100,000 UAH, you will have to pay only 20,000 UAH.
If you do not have documents confirming the payment of taxes abroad, you have the opportunity to submit an application to the tax service of Ukraine at the place of registration and postpone the deadline for submitting the declaration until December 31.
Declaration of charitable assistance
In connection with the war, many Ukrainians receive monetary or humanitarian aid from foreign governments and charitable foundations. The State Tax Service of Ukraine has defined the following rules for declaring charitable assistance:
- You do not need to file a declaration and pay taxes if you received funds in the form of charitable or humanitarian aid from international organizations, governments or foundations.
- You need to submit a declaration if, in addition to charitable assistance, you had additional sources of income – for example, you received a salary, worked as a freelancer or engaged in entrepreneurial activities.
How to submit a declaration while abroad
Ukrainians who are temporarily outside the country can submit an income declaration in several ways:
- By mail – sending documents with a detailed description of attachments. It is important to send the declaration no later than 5 days before the submission deadline.
- Electronically – through the system of electronic document circulation in Ukraine. This is the most convenient option that allows you to send documents quickly and securely.
Taxation of income abroad is an important issue for many Ukrainians who work or do business outside the country. Ukrainian legislation provides for the obligation to declare and pay taxes on all income received abroad, with the exception of charitable assistance. At the same time, the double taxation avoidance mechanism allows citizens who have paid taxes abroad to avoid re-taxation in Ukraine.
In order to avoid problems with the tax authorities, it is important to prepare in advance the necessary documents confirming the payment of taxes abroad, or to use the possibility of submitting a declaration in electronic form. Compliance with these rules will allow you to avoid misunderstandings with the tax service and fulfill your financial obligations to the state on time.
