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

As NFTs (Non-Fungible Tokens) explode in popularity, Ukrainian creators and investors face crucial questions about tax compliance. Reporting NFT profits correctly is essential to avoid penalties under Ukraine’s evolving crypto regulations. This comprehensive guide breaks down everything you need to know about declaring NFT income to Ukrainian tax authorities, with clear steps, requirements, and expert tips.

Understanding NFT Taxation Rules in Ukraine

Ukraine treats NFT transactions as taxable events under personal income tax laws. Key principles include:

• Tax Rate: NFT profits are subject to 18% Personal Income Tax (PIT) + 1.5% Military Duty, totaling 19.5%.
• Taxable Events: Selling NFTs for fiat currency or crypto, trading NFTs for other assets, or receiving NFT royalties.
• Threshold: No minimum threshold – all NFT profits must be reported regardless of amount.
• Residency Rules: Ukrainian tax residents (spending 183+ days/year in Ukraine) pay taxes on worldwide NFT income.

Step-by-Step Guide to Reporting NFT Profits

1. Track All Transactions: Record dates, NFT values in UAH (using NBU exchange rates), buyer/seller details, and wallet addresses.
2. Calculate Taxable Income: Profit = Selling Price – Acquisition Cost (including gas fees and platform commissions).
3. Complete Tax Declaration (Form 1-DF): File annually by May 1st via the State Tax Service portal. Declare profits under “Income from Movable Property” (Section III).
4. Pay Taxes: Transfer owed amounts to treasury accounts by August 1st. Use payment code 121.
5. Retain Documentation: Keep transaction histories, exchange records, and tax receipts for 3 years.

Required Documents for Reporting NFT Income

• Digital wallet transaction histories (with timestamps)
• NFT marketplace settlement reports
• Bank/crypto exchange statements showing fiat conversions
• Proof of acquisition costs (initial purchase receipts)
• Completed Form 1-DF with notarized signature (if filing offline)

Common NFT Tax Reporting Mistakes to Avoid

• Ignoring small transactions: Even micro-profits under ₴1,000 require declaration.
• Forgetting gas fees: Deduct transaction costs to reduce taxable income.
• Using wrong exchange rates: Always convert crypto values to UAH using the National Bank of Ukraine rate on transaction date.
• Missing deadlines: Late filings incur 10-50% fines plus monthly interest.
• Mixing personal/business wallets: Maintain separate wallets for clearer audit trails.

NFT Taxation in Ukraine: FAQ

Q: Do I need to register as a Private Entrepreneur for NFT sales?

A: Only if NFT trading is your primary business activity. Occasional sellers report as individuals.

Q: How are NFT airdrops or free mints taxed?

A: Treated as taxable income at market value upon receipt. Tax applies when you sell or transfer them.

Q: Can I deduct NFT creation costs?

A: Yes! Deductible expenses include minting fees, software subscriptions, and marketing costs directly tied to NFT projects.

Q: What if I sold NFTs for stablecoins?

A: Stablecoin sales still trigger tax events. Convert stablecoin value to UAH using NBU rates on the transaction date.

Q: Are penalties severe for unreported NFT income?

A: Yes. Fines start at 10% of unpaid tax, plus potential criminal liability for large-scale evasion.

Q: How does Ukraine tax NFT staking rewards?

A: Rewards are taxable as miscellaneous income at 19.5% when converted to fiat or traded.

Pro Tip: Use crypto tax software like Keeper or CoinTracking to automate profit calculations and generate Ukraine-compliant reports. Consult a Ukrainian crypto tax specialist if handling high-volume transactions – regulations continue evolving with the Draft Law #10225-1 on virtual assets.