Ukrainians Warned: New Rules on Card Transfer Taxation Explained

How Card Transfers Are Taxed in Ukraine

According to Главком: Contrary to recent concerns, Ukraine does not impose an automatic tax on every transaction made to personal bank cards. Under the Tax Code of Ukraine (PCU), only income received by an individual is subject to taxation-not the transfer itself. This means that payments which do not count as earnings, such as repaying a loan or sending money to relatives, remain tax-free. However, if someone frequently receives money from many different people, tax authorities may view these as undeclared business income.

According to Article 165 of the Tax Code, the following types of payments are exempt from taxation:

• state social assistance;
• subsidies;
• compensation payments;
• payments to persons with disabilities;
• support for children with disabilities;
• maternity and pregnancy benefits;
• targeted payments from the state budget or social insurance funds.

At the same time, regular and identical payments coming from a large number of senders could indicate that someone is running a commercial business without registering as a private entrepreneur (FOP).

Taxation of Financial Transfers

Under Article 174 of the Tax Code, transfers received from immediate family members-specifically parents, spouse, or children-are not taxed. In contrast, monetary gifts from distant relatives or unrelated individuals are treated as income and must be declared. Such earnings are subject to an 18% personal income tax (PIT) plus a 5% military levy.

Ukraine’s tax service does not have automatic access to private bank accounts. However, banks are legally required to conduct financial monitoring under Law No. 361-IX. Information about transactions is protected by Article 60 of the Law of Ukraine 'On Banks and Banking Activity,' which guarantees banking secrecy. Tax authorities can only obtain a statement of account activity during an official audit or with a court order.

Concealing income carries penalties and late-payment interest. Currently, the tax rate is 18% PIT plus 5% military levy. Under Article 123 of the Tax Code, understating a tax liability results in a fine equal to 25% of the assessed tax. For a repeat violation, that fine rises to 50%. Additionally, late-payment interest accrues daily under Article 129, highlighting the importance of meeting tax obligations.

These rules are especially relevant for Ukrainians who regularly receive financial transfers. Understanding them can help avoid legal trouble, such as fines for undeclared income. Given the ongoing challenges facing Ukraine’s economy, knowing one’s rights and duties regarding taxation is essential for ensuring both financial stability and lawful transactions.

As the landscape of taxation evolves, it is crucial for taxpayers to stay informed about potential changes that could impact their financial obligations. Recent updates regarding audit risk criteria may further complicate the situation for individuals receiving multiple transactions. Understanding these new criteria can help you navigate the complexities of tax compliance more effectively. For more insights on this matter, read about the updated audit risk criteria for Ukrainian taxpayers.