An expert revealed key aspects of financial transactions in Ukraine. The use of cards for financial operations and gift exchanges has become a widespread phenomenon. As of April 1, the National Bank of Ukraine has lifted the limit on card-to-card transfers, which was 150,000 hryvnias per month, allowing individuals to make transfers without restrictions.
This is reported by Finway
Vasyl Andriusiak, a partner at MORIS and head of the tax law practice, explained that card-to-card transfers are conducted free of charge. He noted that under the law, 2,000 hryvnias per year are not subject to taxation. According to the Tax Code, 25% of the minimum wage, which amounts to 2,000 hryvnias, is exempt from taxation. However, this exemption only applies to gifts in kind, not cash payments.
“Ideally, all card transfers exceeding the amount of 2,000 hryvnias should be taxed, but with the caveat of whether it constitutes income for the person or not. In other words, a person does not need to pay taxes if the funds were lent to them, and they will return exactly what they received,” Andriusiak explained.
According to the expert, individuals also bear the costs of all bank fees during money transfers, which can vary significantly depending on the specific bank’s rates. Therefore, it is advisable to familiarize oneself with the bank’s fees before making transfers.
Transfers Within Families and Taxation
Andriusiak also discussed card-to-card transfers when it comes to gifts. The Tax Code clearly states that gifts between family members of the first and second degree of kinship are not subject to taxation, even if the amounts are large. Conversely, if a person receives a significant sum, such as 100,000 hryvnias, from someone who is not a relative, they are required to pay taxes, as this is considered income.
For income in Ukraine, the following rates apply: personal income tax – 18%, military levy – 5%. Gifts from non-close relatives are taxed at a reduced personal income tax rate of 5%, but without a properly executed gift agreement, tax authorities may interpret these funds as “other income,” which is taxed at a rate of 18% personal income tax.
Financial Monitoring and Its Importance
The financial monitoring system in Ukraine is designed to prevent the financing of terrorism and the laundering of criminal proceeds. Andriusiak noted that this function is important for many Ukrainians, as some citizens have unofficial funds that they bring to the bank for transfers.
Since 2020, financial monitoring covers transactions of 400,000 hryvnias and above, and for entities related to gambling, 55,000 hryvnias. All cross-border operations and cash transactions are subject to additional scrutiny.
Andriusiak explained that banks may contact clients if their financial activity appears suspicious. For example, if a person frequently transfers the same amounts, it may raise questions about whether this is salary for unregistered entrepreneurial activity.
The expert emphasized that to confirm the source of funds, it is advisable to provide documents that verify the legality of financial transactions. In cases of serious violations, the bank may terminate its relationship with the client and send a notification to the State Financial Monitoring Service.
Currently, individuals are allowed to transfer currency abroad from their foreign currency accounts to recipients’ accounts in foreign banks within the limit of 100,000 hryvnias per month, except for certain categories of SWIFT transfers, such as payment for education or medical services.