In brief

On 3 June 2021, the Parliament of Ukraine adopted the Law of Ukraine “On Amendments to the Tax Code of Ukraine on Repealing Taxation of Income Received by Non-Residents in the Form of Payment for Production and/or Distribution of Advertising and Improvement of the Procedure for Value Added Taxation of Supply of Electronic Services to Individuals by Non-Residents” (“Law”).

Key takeaways

The Law introduces 20% VAT on electronically supplied services (“ESS”) provided by nonresidents to Ukrainian customers.

By its terms, the Law is expected to apply from 1 January 2022.

In more detail


The ESS VAT regime covers supplies of digital services to customers under the B2C model as well as — in the narrowly defined cases — under the B2B model. In this context, for B2B purposes, 20% VAT would apply to ESS supplied to “private entrepreneurs” (PEs) who are not registered as VAT payers. By the term of Ukrainian law, PEs are private individuals who register as a business for tax purposes.

ESS are defined as “services that are provided [1] via the Internet network, [2] in an automated manner, [3] by means of information technologies, and [4] predominantly without interference of humans.”

The Law provides for a non-exhaustive list of ESS, including, among others:

  • supply of digital copies, access to images, text and information, including subscription to online newspapers and journals, and e-books
  • supply of digital copies and/or access to audiovisual works, video and audio on demand, games, including the provision of services involving participation in such games, access to television programs, unless they are broadcast simultaneous to being transmitted over a television network
  • provision of access to informational, commercial and entertaining electronic resources, other similar resources
  • distance teaching via the internet, the supply of which requires no human intervention, including virtual classrooms
  • cloud services in terms of computing resources, data warehousing resources and electronic communications systems
  • supply of software and updates, including digital copies, as well as remote servicing of software and electronic equipment
  • provision of advertising services via the internet network, in mobile applications and via other electronic resources, the provision of advertising space including banner ads on a website/web page/web portal

The Law expressly excludes from the list of ESS:

  • supply of services ordered via the internet but delivered offline (without the use of the internet)
  • supply of copies of works in the field of science, literature and art on physical storage media
  • supply of consulting services via email           
  • rendering of internet access services


The Law presumes that a service is provided to a private individual, unless a customer agreement states that such a recipient of a digital service is a business.

ESS are deemed to be supplied at the customer’s location. The Law provides a non-exhaustive list of customer location proxies:

  • “main” ones in case of supply through:
  • a fixed landline — the customer is presumed to be located in the country where their fixed landline is located (location of the telecommunications provider whose services were used in the process of receiving digital services)
  • mobile networks — the customer is presumed to be located in the country identified by the mobile country code of the SIM card used to receive the services
  • other means — the customer can be presumed to be located where the device is situated or where the access card is sent to for use there, including the IP address of the device used by the customer
  • “additional” ones that should be applied simultaneously with the main ones:
  • the billing address of the customer
  • bank details, such as the location of the bank account used for paying for digital services
  • other commercially relevant information


The nonresident must register for VAT in Ukraine by 31 March of the reporting year if the overall sales of digital services exceed UAH 1 million (approximately USD 37,143) for the preceding calendar year.

The registration application may be filed online in English. No state-issued electronic signatures would be required.


The VAT returns should be filed online on a quarterly basis, i.e., within 40 calendar days following the reporting quarter, in Ukrainian or English.

VAT liability should be (i) assessed with respect to the price of the digital services at 20% and (ii) payable (a) in euro or US dollars (b) within 30 calendar days following the statutory deadline for submission of the VAT return and (c) to a bank account of the State Treasury Service of Ukraine.

The taxpayers are not required to open local bank accounts, for VAT liabilities may be discharged from their foreign bank accounts.

The taxpayers are not required to issue VAT invoices and/or to appoint a local fiscal representative.


The ESS VAT regime is expected to apply from 1 January 2022.