Worldwide VAT, GST and Sales Tax Guide
Transfer of a going concern. Transfer of going concern rules do not apply in Ukraine. As such, VAT applies to all sales of a business or part of a business capable of separate operation including assets.
While a transfer of shares in the legal entity is outside the scope of VAT, sales of particular assets (e.g., equipment, tangible goods, patents) may be viewed as a separate taxable supply, depending on the type of the underlying asset.
Transactions between related parties. In Ukraine, there are no specific rules that indicate the value for VAT purposes for transactions between related parties. Domestic sales between related parties are taxed the same way as where the buyer and seller are not related.
For imports of goods, the invoice value of the goods is taken as a basis for customs valuation purposes, if a relationship between the parties did not influence the price of the goods (the importer may need to produce appropriate evidence at customs’ request).
C. Who is liable
The following types of persons qualify as a “VAT payer” (i.e., a person who is liable to pay VAT in a taxable transaction) under Ukraine’s tax law:
• The person registered as a VAT taxpayer or is subject to a registration as a VAT taxpayer.
• The person that imports goods into Ukraine in amounts subject to tax (provided such person is liable for payment of taxes on the import of goods).
• The person who maintains accounting under joint activity (JA) arrangements, as well as investor (operator) under product sharing agreements (PSA).
• The person who performs asset management.
• The person who disposes of seized, abandoned or unclaimed property as well as property inherited or transferred to the state (regardless of threshold and tax status of such person).
• The person who is liable to administer tax with respect to services supplied by railway transportation companies.
• Non-established foreign entity who supplies electronic services to Ukrainian private customers (not registered for VAT).
If an importer who is not registered for VAT and imports goods in amounts subject to tax, such importer pays VAT during customs clearance, without VAT registration.
If a nonresident entity, including a permanent establishment of a nonresident that has not registered for VAT, supplies services (other than electronic services supplied to private individuals) with a place of supply in Ukraine, Ukrainian service recipient must accrue and pay VAT to the treasury.
A legal entity, individual entrepreneur (except for an entrepreneur who uses the simplified taxation system and belongs to certain groups) or representative office of a nonresident must register as a VAT taxpayer if its taxable supplies exceeded UAH1 million (net of VAT) during the preceding 12 calendar months.
A registrant is assigned a tax identification number (TIN), which is 12 digits for legal entities and permanent establishments of nonresidents (except those for which a 9-digit number applies – see below) and 10 digits for private entrepreneurs. A 9-digit TIN is assigned to the following entities:
• Entities paying tax from a joint activity without establishing a legal entity
• Property managers under property-management agreements
• Investors under product-sharing agreements
Deadline for registration is 31 March, following the year when the registration threshold has been exceeded. For example, where the volume of taxable sales was exceeded in 2024, a nonresident is liable to register for VAT till the end of March 2025.
Failure to register on time is subject to a penalty of 30 minimum wages (approx. USD5,800 as of 2025).
VAT reporting period for the above nonresidents is a calendar quarter (a special type of simplified VAT return to be filed electronically). The VAT base and taxable amount are determined in foreign currency (EUR or USD), input tax (if any) is not deductible.
Online marketplaces and platforms. Under the general rule, an intermediary supplying electronic services on its own behalf is liable for VAT.
At the same time, an intermediary (e.g., marketplace) itself would not qualify as a taxpayer where it:
• Supplies electronic services under intermediary agreements, if the invoices provided to customers contain a list of electronic services and their actual provider.
• Only processes payments for electronic services but does not participate in actual provision of electronic services.
Registration procedures. Existing entities that are subject to a mandatory registration file a registration request by the 10th day of the calendar month following the month in which the threshold (UAH1 million) was exceeded.
A registration application is completed in electronic format, using the statutory template (approved by the Ministry of Finance) and must bear a qualified electronic signature of the applicant.
The tax authority includes the entity in the register of VAT taxpayers within three working days after receipt of the registration request or from the date indicated by the requestor (in the case of voluntary registration). The tax authority issues the VAT registration certificate.
VAT registration of a taxpayer is effective from the following dates:
• For voluntary VAT registration:
– First day of the calendar month indicated by the taxpayer in the registration application as a first reporting period
– First day of the month following 10 calendar days after filing the registration application (where the taxpayer did not opt to elect the date of its VAT registration in the application)
• For persons opting for the single tax system:
– First day of the calendar quarter (reporting period for the single tax system, which implies accrual of VAT) indicated by the taxpayer in the registration application
– First day of the calendar month (reporting period for VAT) for taxpayers who shifted from the 5% to 3% single tax system
• For mandatory VAT registration:
– First day of the calendar month when the taxpayer shifted from the single tax to general tax system, implying payment of VAT (if the registration application has been lodged prior to the date of transfer from the single tax to general tax system)
– Date of data entry to the registry of VAT payers (for persons who exceeded the mandatory VAT registration threshold, or for those taxpayers who lodged a registration application after the date if shifting from single tax to general tax system)
Note that access to the online VAT taxpayers’ database is currently restricted during the martial law period.
• For supplies of goods and services paid from the state budget, the VAT liability arises upon receiving the payment (or remuneration in any other form) by the supplier, regardless of when the goods/services were actually supplied.
Deposits and prepayments. There is no special time of supply rules in Ukraine for deposits and prepayments. As such, the general time of supply rules apply (as outlined above).
Prepayments (except for export/import of goods) normally trigger a VAT event. If the supply does not take place and the seller returns the prepayment, the seller and the buyer may adjust the output and input tax, respectively, based on the adjustment note to the VAT invoice properly registered in the Unified Tax Invoice Register.
Continuous supplies of services. There is no special time of supply rules in Ukraine continuous or rhythmic (two times and more per month) supplies of goods and services. As such, the general time of supply rules apply (as outlined above). However, the law prescribes that in such cases the supplier may issue aggregate VAT invoices to each buyer registered for VAT or one aggregate VAT invoice for supplies to buyers not registered for VAT, by the last day of the month. A VAT invoice must be registered in the Unified Tax Invoice Register within the statutory deadlines. Generally, a VAT invoice is to be issued when the VAT liability arises.
Goods sent on approval for sale or return. There is no special time of supply rules in Ukraine for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. A reverse-charge mechanism applies if a nonresident entity (including a permanent establishment of the nonresident that has not registered for VAT) supplies services for which the place of supply is within Ukraine.
In these cases, the VAT liability would arise for the service recipient under the reverse-charge procedure. The service recipient accrues a VAT liability on the payment for the services or the execution of the act of acceptance, whichever occurs first. The service recipient registered as a taxpayer may record a VAT credit after registration of the VAT invoice in the Unified Tax Invoice Register.
Leased assets. The time of supply rules for the supply of leased assets depends on the type of lease (i.e., operational lease or financial lease).
Transfer of assets under the financial lease arrangements is treated as supply of goods for VAT purposes. The lease qualifies as a “financial lease” if at least one of the below conditions is satisfied:
• Leased assets are transferred for a term during which at least 75% of their initial value is depreciated, and the lessee must purchase these assets from the lessor under the contract.
• At the time of expiration of the lease arrangement, the residual (balance) value of the leased assets constitutes up to 25% of the initial value of such assets.
• The total amount of lease payments equals/exceeds the initial value of the leased assets.
• Leased assets are manufactured under the instructions of the lessee and cannot be used by the third parties, considering the characteristics of such assets.
In the case of financial leasing, the lessor must accrue VAT liabilities on the value of the assets upon their transfer to the lessee. The lessee is entitled to credit this VAT upon receipt of assets from the lessor.
Transfer and return of assets under operational lease (i.e., all leasing arrangements that do not satisfy the criteria for financial leasing) is not subject to VAT. Leasing fees payable under the operational lease arrangements can be subject to VAT under the general rules for supply of services.
Pre-registration costs. Input tax incurred on pre-registration costs in Ukraine is not recoverable. Bad debts. Output tax accounted for on supplies that do not get paid by the recipient (i.e., bad debts) cannot be recovered in Ukraine.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in Ukraine is not recoverable.
H. Invoicing
VAT invoices. A Ukrainian VAT taxpayer (seller) must provide an electronic VAT invoice registered in the Unified Tax Invoice Register to the buyer. The VAT invoice must be issued on a date when the tax liability arises for the seller and is registered by the end of the month (for VAT invoices issued from the 1st to the 15th day of the calendar month) and by the 15th day of the following month (for VAT invoices issued from the 16th day of the calendar month). The VAT invoice must contain all the necessary elements and must bear a duly registered electronic signature. A supplier must issue separate VAT invoices for exempt and taxable supplies.
If a VAT invoice is improperly completed or is not registered in the Unified Register, the buyer does not have the right to a VAT credit, but the supplier must report the relevant VAT liability. Improper completion of the VAT invoice (except for mistakes in the HS code of the goods) still allows identification of the transaction, and such VAT invoice should be allowed for registration.
The authorities may block registration of VAT invoices based on the risk assessment system that automatically monitors all VAT invoices. In this case, the authorities request additional explanations/documentation (to be submitted within 365 calendar days after arising tax liabilities reflected in the tax return) sufficient for unblocking registration of VAT invoices.
Taxpayers must issue electronic excise invoices for all shipments of certain excisable goods (fuel and ethyl alcohol). The excise invoice layout and principles of electronic excise tax administration are similar to VAT rules.
Credit notes. If output/input tax needs to be adjusted (e.g., due to change of compensation, return or goods/advance payment), the seller must issue electronically an adjustment note to the VAT invoice that must be registered in the Unified Tax Invoice Register either by the seller (in the case of a compensation increase) or by the buyer (in the case of a compensation decrease). The format of the adjustment note is approved by the Ministry of Finance.
In some cases, the buyer has the right to a VAT credit without the VAT invoice on the basis of the following documents:
• Transport ticket or an invoice for hotel or communication services
• Checks for goods or services for an amount not exceeding UAH200 per day
• Customs cargo declaration for the import of goods
Electronic invoicing. Electronic invoicing is mandatory in Ukraine for all registered VAT payers.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is mandatory for all VAT payers. There is no threshold beyond which taxpayers are required to adopt electronic invoicing in Ukraine. The requirements related to electronic invoicing are the same as those for paper invoicing.
VAT invoices are filed under statutory template in the format (XML-based) published by the tax authorities. A VAT invoice must contain all relevant elements and bear an electronic signature
duly registered in the tax authorities. Only qualified electronic signatures of the taxpayer’s authorized persons, as well as an electronic stamp of the company (where available) are accepted for completion of VAT invoices.
Simplified VAT invoices. Simplified VAT invoicing is not allowed in Ukraine. As such, full VAT invoices are required.
Self-billing. Self-billing is not allowed in Ukraine.
Proof of exports. Export of goods should be supported by duly executed export customs declaration certified by customs to evidence that the goods left customs territory of Ukraine.
Foreign currency invoices. Invoices cannot be issued in a foreign currency in Ukraine. All invoices must be issued in the domestic currency, which is the Ukrainian hryvnia (UAH).
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons in Ukraine. As such, full VAT invoices are required (registered in the Unified Tax Invoice Register). However, it is not mandatory to provide a full VAT invoice to private customers (B2C), unless they request it.
Records. In Ukraine, examples of what records must be held for VAT purposes include source accounting documents (e.g., invoices, service acceptance acts, supply contracts), accounting ledgers, VAT returns, customs declarations, issued and received VAT invoices, and other documents related to tax accounting.
In Ukraine, VAT books and records can be held outside of the country. Note that Ukrainian law is silent on whether the records must be kept locally in Ukraine or abroad. However, regardless of where such records are held, they (including hard copies) must be made available to the tax authorities in the case of an audit.
Record retention period. The statutory retention period in Ukraine is three years (1,095 days) after the deadline for filing a tax return for the relevant reporting period.
Electronic archiving. Electronic archiving is allowed in Ukraine. Electronic keeping and archiving records are allowed for documents that were initially completed electronically (inter alia these documents should bear a relevant electronic digital signature). Otherwise, physical storage (i.e., paper) must be used.
I. Returns and payment
Periodic returns. VAT returns are filed monthly (within 20 calendar days of the following month).
Periodic payments. Tax is payable within 10 days after the filing deadline. VAT liabilities must be paid to the revenue from the special VAT account of the taxpayer (opened in the State Treasury). Taxpayers remit funds to the VAT account from their regular bank accounts. After the expiration of the payment deadline, the Treasury will collect funds to the revenue, based on the amount of tax due indicated in the returns (provided by tax office). All settlements must be made in Ukrainian hryvnia (UAH).
Electronic filing. Electronic filing is mandatory in Ukraine for all taxpayers.
A system of electronic VAT administration is based on the interaction of the Unified Tax Invoice Register (UTIR) with the special VAT accounts.
VAT accounts are free for all taxpayers in the State Treasury of Ukraine. Under this system the supplier can register a VAT invoice in UTIR for an amount that exceeds its VAT credit only when the taxpayer pays the corresponding amount of money into its VAT account. The VAT invoice registration threshold is calculated according to a formula. The formula also includes an allowed
It is not clear whether an overstatement of negative VAT (that does not lead to tax understatement or the overstatement of VAT refund) is subject to a fine.
The following are the penalties for the understatement of tax liabilities if the taxpayer corrects the mistake made in the VAT return:
• 3% of the understatement of tax liabilities if it submits an adjustment calculation.
• 5% of the understatement of tax liabilities if it corrects the mistake in the tax return for the next reporting period.
• 5% of the understatement for the failure to submit an adjustment calculation.
The following penalties are applied for failure to timely register VAT invoices in the UTIR:
• 10% of VAT amount if the delay is up to 15 calendar days.
• 20% of VAT amount if the delay is from 16 to 30 calendar days.
• 30% of VAT amount if the delay is from 31 to 60 calendar days.
• 40% of VAT amount if the delay is 61 days to 365 calendar days.
• 50% of VAT amount if the delay is over 365 calendar days.
• 2% of the volume of supply, but no more than UAH1,020 – for VAT invoices for exempt, zerorated and certain other transactions (where the taxpayer voluntarily registers belated VAT invoices).
• 5% of the volume of supply, but no more than UAH3,400 – for VAT invoices for exempt, zerorated and some other transactions (where the tax authorities detect failure to timely register a VAT invoice upon tax audit).
If tax authorities detect failure to register a VAT invoice, they will issue the tax notification decision and apply a penalty in the amount of 50% of the VAT amount. This penalty will not be applied where a VAT invoice is registered prior to tax audit. The above penalties (10%–50%) are not applied where the VAT invoice is registered within 10 calendar days after receipt of the tax notification decision.
If the tax authorities block registration of a VAT invoice based on the risk assessment system, the above penalties are not applied for the duration of the blocking period.
A failure to register a VAT invoice after 10 calendar days following the receipt of the tax-notification decision may attract a penalty in the amount of 50% of VAT.
The following fines are applied for mistakes in a VAT invoice detected by the tax authorities during a documentary out-of-schedule tax audit at the buyer’s request. The percentage penalty is based on the VAT amount due, and the timings are based on if the mistake is not corrected within such number of calendar days:
• UAH170 and obligation to correct the mistake
• 10% (15 days)
• 20% (16 to 30 days)
• 30% (31 to 60 days)
• 40% (61 to 90 days)
• 50% (91 to 120 days)
• 60% (121 to 150 days)
• 70% (151 to 180 days)
• 100% (after 181 days)
These penalties are applied for mistakes in a VAT invoice regarding indication of the tariff code of goods or code of services under the State Classifier of Products and Services.
In addition to the above, the interest penalty may apply for tax understatement and late payment. The interest penalty for late payment applies from the first business day on which the tax liability becomes overdue (that is, after expiration of the deadline for settling the tax liability indicated in the tax return or in the tax-notification decision issued by the tax authorities). Where
taxpayers voluntarily correct errors in tax returns, late payment interest applies from the 91st calendar day after expiration of the deadline for payment of tax. The interest penalty for tax understatement applies to the whole period of understatement of the tax liability, even though the taxpayer may have recourse to the administrative or court appeal procedure.
The rate of the interest penalty equals 120% (100% in cases where taxpayers voluntarily correct errors in tax returns) of the yearly NBU discount rate for each day of tax understatement.
In addition to financial sanctions, administrative or criminal liability may apply.
Failure to notify tax authorities of the taxpayer’s reorganization would result in revoking VAT registration. Fines for violation of the registration requirements (UAH340–UAH2,040) may also apply.
If the taxpayer fails to retain primary accounting documents requested by the tax authorities upon audit, this will trigger a fine of UAH1,020 (UAH2,040 for repeated violation).
There are no specific penalties associated with the late notification or failure to notify the tax authorities of changes to a taxpayer’s VAT registration details. For further details, see the subsection Changes to VAT registration details above.
Penalties for fraud. Deliberate tax evasion committed by a taxpayer is recognized as a criminal offense under the Criminal Code of Ukraine. Tax evasion may trigger criminal responsibility, if the total amount of underpaid tax (including financial sanctions) exceeds 3,000 statutory nontaxable minimum income (for 2025, the threshold is UAH4,542,000 [approx. USD110 350]). At the time of preparing this chapter, the threshold of criminal liability for tax evasion for 2025 has been updated based on the draft Law on State Budget for 2025.
The potential penalties for tax evasion include fines (the amount gradually rises depending on the amount of unpaid tax liability), restriction to occupy certain positions or conduct certain activities for up to three years and, in certain cases, confiscation of property.
Ukrainian Criminal Code does not envisage any special provisions on criminal liability of tax advisors.
Personal liability for company officers. Administrative penalties for violation of tax rules (including late registration/filing, underpayment of tax, errors in VAT returns, etc.) are levied on the company as a whole.
In addition, criminal penalties for tax evasion (refer above) are imposed on the relevant natural persons/employees of the taxpayer (in practice this may include directors and chief accountants).
Statute of limitations. The statute of limitations in Ukraine is 1,095 days. This is starting from the filing deadline (20th calendar day of the month following the reporting months). During this period, the tax authorities can audit taxpayers, as well as assess tax and apply penalties for a failure to comply with the VAT law.
The statute of limitations does not apply (i) where the taxpayer fails to file a VAT return or (ii) the taxpayer is found guilty of tax evasion by the court.
K. VAT during martial law
Tax administration rules. The president of Ukraine announced martial law in Ukraine by the Decree No. 4/2022 of 24 February 2022. Martial law is periodically extended by the President and Ukraine’s Parliament. The following VAT-related administration rules are valid during the martial law period:
• If the taxpayer is unable to timely fulfil its tax obligations (due to force majeure circumstances), e.g., with respect to settlement of taxes, submission of tax returns, VAT invoice registration,
then penalties for violation of the tax law would not apply, provided that such taxpayer would perform relevant obligations within six months after the termination or cancellation of martial law in Ukraine.
• Taxpayers are allowed to retain input tax credit in respect of the following goods:
– Destroyed/lost due to force majeure circumstances during martial law.
– Goods donated to the state/local authorities (including voluntary military units), as well as donated to any third parties for the purposes of securing Ukraine’s defense.
• Free-of-charge supplies of goods and services to the military units, civil state authorities, as well as to health care institutions do not represent a VAT-able supply.
• Where the taxpayer detects and corrects errors occurring in the tax periods during martial law, penalties and late payment interest do not apply.
• Late payment interest does not apply where the state authorities failed to timely refund VAT due to force majeure circumstances during martial law.
• During martial law, as well as within six months after termination/cancellation of the martial law, the deadlines for registration of the VAT invoices in UTIR are as follows:
– For VAT invoices issued from the 1st to the 15th day of the calendar month – no later than by 5th calendar day of the following month.
– For VAT invoices issued from the 16th day of the calendar month – no later than by 18th calendar day of the following month.
• Reduced amounts of penalties for late registration of the VAT invoices apply:
– 2% of VAT amount if the delay is up to 15 calendar days.
– 5% of VAT amount if the delay is from 16 to 30 calendar days.
– 10% of VAT amount if the delay is from 31 to 60 calendar days.
– 15% of VAT amount if the delay is 61 days to 365 calendar days.
– 25% of VAT amount if the delay is over 365 calendar days.
Most types of tax audits (excluding desk audits, factual audits, currency control audits, audits of VAT refund claims exceeding UAH100k, as well as audits performed at taxpayer’s request/in the case of liquidation of the legal entity, etc.) were initially suspended/banned after the introduction of martial law.
According to the law adopted by Parliament in 2023, tax audits resumed from 1 December 2023 (excluding certain categories of taxpayers, e.g., those located at temporary occupied Ukrainian territories, zones of military hostilities). During martial law, tax audits may be performed only where there are sufficient safety conditions, including access to the company’s premises, records, stock-taking, etc.
Export security regime. The Ukrainian government has the right to implement an “export security regime” for certain types of agricultural commodities (grain, wheat, corn, sunflower, honey, soya beans).
This regime requires a separate decision from the government and is not yet in force at time of writing. If implemented, the export security regime would tighten the VAT rules for agricultural exports, as follows:
• Only persons who are registered for VAT in Ukraine would be able to export agricultural commodities.
• Minimum allowable export prices for exported goods would be implemented.
• The exporter would be required to issue a VAT invoice for each exported consignment, and a prior customs declaration for the goods must be lodged. Registration of such an invoice may be blocked by the tax authorities, if certain risk criteria are met.
• Export of agricultural commodities would be subject to the following VAT rates:
– 0% – for exporters who comply with currency control regulations (i.e., the amount of nonrepatriated profits does not exceed 20% of the total annual value of exports).