Investment income and its taxation features

What is investment income?

Corporate rights and securities (shares) are investment assets (both in Ukraine and abroad).

Accordingly, investment income is income received from transactions with investment assets. Such transactions include, in particular

• the sale of an investment asset;
• the exchange of an investment asset;
• the repurchase or redemption of an investment asset;
• the return of funds or property previously contributed to the authorised capital (in certain cases).

Investment income is calculated as the positive difference between the income received from the sale of an investment asset, taking into account exchange rate differences (if any), and its value, which is determined from the amount of documented expenses for the acquisition of such an asset.

Formula: (amount of funds received from the sale of the asset) – (amount of funds spent in the past on the acquisition of the asset*) = investment income.

*Expenses may include brokerage or bank commissions and must be confirmed by documents certifying the fact of settlement transactions (as indicated by the tax authority in its clarification).

If the calculation of investment profit results in a negative value, it is considered an investment loss.

Taxation and reporting features

The taxpayer keeps track of the overall financial result of transactions with investment assets separately from other income and expenses.

The reporting period is the calendar year, at the end of which the taxpayer is required to submit an annual tax return reflecting the overall financial result (investment profit or investment loss) received during the reporting year.

The overall financial result of transactions with investment assets is determined as the sum of investment profits received during the reporting (tax) year, reduced by the amount of investment losses incurred during that year.

If the total financial result of transactions with investment assets is negative, its amount is carried forward to reduce the total financial result of transactions with investment assets in subsequent years until it is fully repaid.

Investment income is taxed at the following rates:

• 18% personal income tax (PIT);
• 5% military tax (MT).

Investment income is not taxed if its amount does not exceed UAH 4,240 (as of 2025).

Deadlines for declaring and paying taxes:

• submission of a tax return on property status and income – by 1 May of the current year for the previous reporting year;
• payment of taxes – by 1 August.

Please note that if investment income is received from an individual or non-resident who is not a tax agent, the obligations to file a tax return and pay taxes rest with the tax resident of Ukraine.

Case law

Case No. 320/11797/25

The claimant acquired a 50% share of the total authorised capital of the limited liability company at a price of UAH 2,750,000. Subsequently, he sold it at the same price of UAH 2,750,000. As evidence, the claimant provided share purchase agreements, a receipt for the funds, and a share transfer certificate.

The Main Directorate of the State Tax Service in Kyiv issued tax notices-decisions, according to which the following amounts were charged: UAH 618,750 in personal income tax, UAH 51,562.50 in military tax, and UAH 1,020 in penalties.

The Kyiv District Administrative Court decided to recognise the tax notices as unlawful and to cancel them. Since the transactions involving the alienation of the share in the authorised capital did not generate any investment income, the amount of income received was equal to the amount of expenses incurred. Accordingly, there is no object of taxation for personal income tax and military tax.

Case No. 320/59160/24

The claimant acquired (purchased) corporate rights in a limited liability company in exchange for real estate owned by her at a price of UAH 24,999,000 and a cash contribution of UAH 1,000.

Some time later, the Claimant sold her share in three parts, amounting to UAH 8,332,500, UAH 8,335,000 and UAH 8,332,500, respectively.

An analytical study of the real estate market was conducted to determine the approximate value. According to the results of the study, the value of the real estate (non-residential premises) was in the range of UAH 25,000,000 – UAH 26,000,000.

The Main Directorate of the State Tax Service in Kyiv issued tax notices-decisions, according to which the following amounts were charged: UAH 1,020 in penalties, UAH 4,500,000 in personal income tax, UAH 1,125,000 in penalties, UAH 375,000 in military tax and UAH 93,750 in penalties.

The Kyiv District Administrative Court decided to declare the tax notices unlawful and to cancel them. Since the plaintiff’s expenses for acquiring a share in the authorised capital of the LLC are equal to the value of her property contribution in the amount of UAH 25,000,000, which corresponds to the market value of the real estate objects in exchange for which the plaintiff acquired the corporate rights of the LLC. It was at the above-mentioned cost of acquiring corporate rights in the LLC that the plaintiff subsequently sold them in an amount equivalent to the percentage of the share in the authorised capital sold.

The decision is currently being appealed by the tax authority.

Conclusions

Therefore, the obligations of tax residents of Ukraine with regard to taxation of investment income are as follows:

• to keep records of the overall financial results of transactions with investment assets;
• to include the amount of investment income in the total annual taxable income;
• to submit a tax return on property status and income;
• to pay taxes.