Ukrainians may be allowed to invest tax-free – a new bill registered in the Parliament
A bill No. 15314 was registered in the Verkhovna Rada regarding amendments to the Tax Code of Ukraine and other laws to support the national investor.
The document provides for changes to the Tax Code of Ukraine and the Law of Ukraine "On Capital Markets and Organized Commodity Markets" to introduce personal investment accounts.
What is a personal investment account
The bill defines a personal investment account as an analytical account in the internal accounting system of an investment firm, where the funds of an individual resident of Ukraine and obligations related to them are recorded.
Such an account is opened by an investment firm to carry out the client's investment activities and is maintained in accordance with legislation and regulatory acts of the National Securities and Stock Market Commission.
Conditions for opening and using the account
The validity period of a personal investment account is unlimited.
The client will be able to transfer funds to the account monthly up to 10,000 euros (threshold amount), which is calculated according to the NBU exchange rate as of January 1 of the respective year.
Each citizen may have only one such account, except for temporary opening when changing the investment firm.
Investment opportunities
Funds recorded in personal investment accounts are proposed to be directed to:
- issuable securities freely traded in Ukraine
- financial and commodity agricultural notes
- other financial instruments defined by the National Securities and Stock Market Commission
The goal is to create an instrument for investing in the national capital market.
Tax benefits
A special taxation regime for individuals' income is envisaged.
Income from investing through personal investment accounts (profits from securities transactions, dividends, interest, and other income) will not be subject to taxation and will not be included in the total annual taxable income provided that the funds remain in the account for 1,095 calendar days.
In case of early withdrawal of funds, taxation applies.
Control and reporting
Investment firms will be required to notify tax authorities about:
- opening and closing of personal investment accounts
- annual client transactions on such accounts
Automatic information exchange between firms and the tax service is also provided.
Additional restrictions and rules
The bill establishes:
- strict requirements for account maintenance
- restriction to use only one account per person
- procedure for changing the investment firm
- grounds for early account closure
- penalties for rule violations
Income after early withdrawal of funds or account closure will be subject to taxation.
Amendments to other laws
It is also proposed to:
- fix the definition of "personal investment account" in the Law "On Capital Markets and Organized Commodity Markets"
- establish detailed rules for account use
- introduce requirements to invest only in specified financial instruments
- apply the "delivery versus payment" principle
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