How to Report NFT Profit in Ukraine: Complete Tax Guide 2024

Understanding NFT Taxation in Ukraine

Non-fungible tokens (NFTs) have exploded in popularity, but many Ukrainian creators and investors struggle with tax obligations. In Ukraine, profits from NFT sales are considered taxable income under the Personal Income Tax (PIT) framework. The State Tax Service of Ukraine (STSU) classifies NFT earnings as either:

• Business income (if traded regularly)
• Non-business income (occasional sales)

Both categories are taxed at a combined rate of 18% income tax + 1.5% military duty, totaling 19.5%. Failure to report can result in penalties up to 50% of unpaid taxes plus fines.

Step-by-Step Guide to Reporting NFT Profits

Step 1: Calculate Your Taxable Income

Determine your net profit using this formula:
Sale Price – Acquisition Cost – Blockchain Fees = Taxable Income
Example: Selling an NFT for $2,000 that cost $500 to create with $50 in gas fees yields $1,450 taxable income.

Step 2: Convert to Hryvnia

Use the official NBU exchange rate on the transaction date. Document rates from the National Bank of Ukraine website for audit proof.

Step 3: File Tax Declaration (Form 3-ППП)

Complete these sections:

• Section III.1 for non-business income
• Annex 5 for cryptocurrency transactions
• Specify income code 180 for “other revenues”

Deadline: May 1st following the tax year. File electronically via the STSU portal or at a tax office.

Step 4: Pay Taxes

Submit payments by August 1st to avoid penalties. Use payment details:

• KBK: 999999 (sample code – verify current year code)
• Recipient: State Tax Service of Ukraine

Essential Documentation for NFT Tax Reporting

Maintain these records for 3 years:

• Blockchain transaction IDs
• Wallet addresses
• Purchase/sale agreements
• Exchange rate proofs
• Fee receipts (minting, marketplace, gas)

Tip: Use crypto tax software like Koinly or CoinTracking for automated reporting.

Common NFT Tax Mistakes to Avoid

• Ignoring small transactions: All sales must be reported regardless of amount.
• Forgetting cost basis: Minting fees and gas costs reduce taxable income.
• Currency conversion errors: Always use NBU rates, not exchange rates.
• Missing deadlines: Late filings trigger 10-50% penalties.
• Mixing personal/business wallets: Maintain separate wallets for clearer tracking.

Frequently Asked Questions (FAQ)

Do I pay tax if I sell NFTs at a loss?

No. Losses can be carried forward to offset future NFT profits for 5 years.

Are NFT airdrops taxable in Ukraine?

Yes. Received airdrops count as income at fair market value upon receipt.

How are NFT royalties taxed?

Royalties are taxed as ongoing income at 19.5% when received.

Can I deduct NFT creation costs?

Yes. Minting fees, marketing expenses, and software costs are deductible against profits.

What if I trade NFTs on foreign platforms?

Ukrainian residents must declare worldwide NFT income. Use Form 3-ППП with foreign income annexes.

Are there tax exemptions for NFT artists?

No special exemptions exist, but creators may qualify for general artist deductions under Ukrainian tax code Article 165.1.37.

Staying Compliant in 2024

With Ukraine implementing stricter crypto oversight, accurate NFT tax reporting is crucial. Consult a Ukrainian tax advisor specializing in digital assets for complex cases. Bookmark the official STSU website for updates as regulations evolve. Proper reporting avoids penalties while supporting Ukraine’s digital economy growth.