18 November 2022

Ukraine Introduces E-residency And 5% Single Tax For Non-resident Individuals



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On October 6, 2022, the Law of Ukraine No. 2654-IX "On Amendments to the Tax Code of Ukraine and some other laws of Ukraine regarding the taxation peculiarities of electronic...
Ukraine Tax
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On October 6, 2022, the Law of Ukraine No. 2654-IX "On Amendments to the Tax Code of Ukraine and some other laws of Ukraine regarding the taxation peculiarities of electronic residents' business activities" was adopted (the "Law"). It will enter into force on April 1, 2023. The Law introduces a special status for foreign individuals who are not Ukrainian tax residents allowing them to carry on business activities without the need to be present in Ukraine. For these purposes the e-resident will be able to open a bank account, obtain an electronic digital signature and register as a private entrepreneur remotely.


Only foreigners who have reached the age of 18 can get the e-resident status.

The list of countries whose citizens (subjects/residents/persons with permanent place of residence/stay/registration) are allowed to become e-residents in Ukraine is to be determined by the Ministry of Digital Transformation together with the Ministry of Finance of Ukraine under the procedure established by the Cabinet of Ministers of Ukraine (at the time of preparation of this newsletter not published).

The following individuals will not be able to obtain the e-resident status:

  • citizens of Ukraine;
  • foreigners who have the right on permanent residence in Ukraine or who are the tax residents of Ukraine;
  • stateless persons;
  • citizens/residents of a country recognized as an aggressor state and/or an occupying state (Russian Federation);
  • citizens/residents of the countries identified by the European Commission as the countries with weak regimes on preventing and counteracting to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction;
    These countries are Afghanistan, Barbados, Burkina Faso, Cambodia, Cayman Islands, Haiti, Jamaica, Jordan, Mali, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Senegal, South Sudan, Syria, Trinidad and Tobago, Uganda, Vanuatu, Yemen, Zimbabwe.
  • citizens/residents of countries included in the FATF "black" and "grey" lists;

The FATF (The Financial Action Task Force) "black list" identifies countries that are considered inadequate in money laundering and counter-financing of terrorism regimes.

Among the countries included in the "black list" are Iran and North Korea.

Among the countries included in the "grey list" are Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Democratic Republic of Congo, Gibraltar, Haiti, Jamaica, Jordan, Mali, Morocco, Mozambique, Panama, Philippines, Senegal, South Sudan, Syria, Tanzania, Turkey, Uganda, United Arab Emirates, Yemen.

  • persons who receive income from the sources in Ukraine in return for provided goods, works, services (except for passive income)

According to the Tax Code of Ukraine (the "TCU"), the following items are recognized as passive income:

  • interest on a current or deposit bank account, on a deposit in credit unions, other interest (including discount income);
  • interest or discount income on a registered saving (deposit) certificate;
  • fee (interest), which is distributed in accordance with the share contributions of the members of the credit union;
  • income distributed by the company that manages assets of the investment fund, on the placed assets;
  • income received from mortgage-backed securities (mortgage bonds and certificates);
  • interest (discounts) received by the bond holder from their issuer in accordance with the law;
  • income received on certificates issued by real estate operation fund and income received by the taxpayer as a result of the redemption (repayment) by the issuer of the real estate fund certificates in the order determined by the certificate emission prospectus;
  • investment profit, including gains from operations with state securities and debt obligations of the National Bank of Ukraine, taking into account the exchange rate difference;
  • royalties;
  • dividends;
  • insurance payments and compensations.

Accordingly, if a foreigner receives passive from the source in Ukraine, as listed above, (s)he will be able to obtain the status of the e-resident.


Registration and tax registration of a foreign individual takes the following stages:

1. Status of the e-resident

To obtain the status of the e-resident eligible foreigner has to submit an application online through the special information system "E-resident" which does not require the physical presence of a foreigner in Ukraine. The foreigner is undergoing the identification procedures, following which (s)he gets access to the qualified electronic trust services, which means that (s)he gets a qualified electronic signature ("QES"). The ID to be used for the identification purposes is a passport of a foreigner for traveling abroad.
The detailed procedure for obtaining the e-resident status, identification of the foreigners and providing them with access to the qualified electronic trust services is determined by the Cabinet of Ministers of Ukraine (to be adopted).

2. Status of a private entrepreneur and a single tax payer under the third group without paying VAT.

To register as a private entrepreneur an e-resident submits an application in electronic form which must be signed with QES via the Unified State Web Portal of Electronic Services in the manner determined by the Ministry of Justice of Ukraine and the Ministry of Digital Transformation.

An e-resident becomes automatically a single tax payer starting from the day of his/her state registration without the need to separately submit an application to become a single tax payer (which usually shall be submitted on a separate basis).

3. Tax registration.

Tax authorities will register an e-resident based on the information received from the "E-resident" information system. Therefore, there is no need to submit any applications to the tax authorities.

When a foreigner submits an application to obtain e-resident status (paragraph 1 above), this equals to submission of a taxpayer's registration card which is basically an application for the registration in the State Register of Individuals and obtaining a Ukrainian tax identification number.

Tax authorities will register e-residents as single tax payers under the third group within two working days following receipt from the state registrar of the information on the registration of the e-resident as private entrepreneur in accordance with the procedure established by the Law of Ukraine "On State Registration of Legal Entities, private entrepreneurs and public associations".

The tax address of an e-resident is the e-mail address specified by such person in the application for obtaining e-resident status. Correspondence between e-residents and tax authorities is carried out exclusively by means of electronic communication using QES.

4. Opening of a bank account.

An e-resident can only open a bank account through the "E-resident" information system after his/her successful registration. The system will contain a list of banks available for opening of a bank account.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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