A bill has been introduced in the Rada that would allow for tax-free investment
11 June 15:11
Members of Parliament have introduced Bill No. 15314 in the Verkhovna Rada, which provides for the introduction of personal investment accounts for individuals who are residents of Ukraine. This was announced by Danylo Getmantsev, chairman of the parliamentary committee on finance, tax, and customs policy, according to "Komersant Ukrainian".
“This is a special tool that allows citizens to invest through investment firms in securities and other financial instruments within clearly defined rules and with an appropriate level of protection,” Getmantsev wrote.
One of the key provisions of the bill is a special tax regime: income received from investments through such accounts, including from securities transactions, dividends, and interest, will not be subject to taxation, except in cases of early withdrawal of funds, specifically before the end of 1,095 calendar days.
“The bill also establishes clear safeguards: the ability to open only one such account, specific conditions for maintaining it, switching between investment firms, and early closure. This minimizes the risk of abuse and ensures transparency for the state and protection for the investor,” the MP wrote.
Getmantsev noted that the bill was developed jointly with the National Securities and Stock Market Commission (NSSMC), which allowed for consideration of capital market practices, the regulator’s position, and ensure a balanced combination of the interests of the state, investors, and business.
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What is a personal investment account
The bill defines a personal investment account as an analytical account within an investment firm’s internal accounting system, where the funds of a Ukrainian resident individual and the obligations associated with them are recorded.
Such an account is opened by an investment firm to conduct the client’s investment activities and is maintained in accordance with the laws and regulations of the National Securities and Stock Market Commission.
Conditions for opening and using the account
The term of the personal investment account is not limited.
The client may transfer funds to the account each month in an amount up to 10,000 euros (threshold amount), calculated at the NBU exchange rate as of January 1 of the relevant year.
Each citizen may have only one such account, except in cases of temporary opening when changing investment firms.
Investment Opportunities
Funds held in personal investment accounts may be invested in:
- securities in free circulation in Ukraine
- financial and commodity agricultural notes
- other financial instruments specified by the NSSMC
The goal is to create a tool for investing in the national capital market.
Tax Benefits
A special tax regime for personal income is envisaged.
Income from investments through personal investment accounts (gains 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 1095 calendar days.
In the event of early withdrawal of funds, taxation applies.
Control and Reporting
Investment firms will be required to notify tax authorities of:
- the opening and closing of personal investment accounts
- annual client transactions on such accounts
An automatic exchange of information between firms and the tax authority is also provided for.
Additional restrictions and rules
The bill establishes:
- strict requirements for account maintenance
- a restriction on the use of only one account per person
- procedures for changing investment firms
- grounds for early account closure
- penalties for violating the rules
Income received after early withdrawal of funds or account closure will be subject to taxation.
Amendments to other laws
It is also proposed to:
- to enshrine the definition of “personal investment account” in the Law “On Capital Markets and Organized Commodity Markets”
- establish detailed rules for the use of accounts
- introduce requirements to invest only in specified financial instruments
- apply the “delivery versus payment” principle
Previously, similar legislative initiatives provided for the introduction in Ukraine of equivalents to individual investment accounts in the form of personal medium- and long-term accounts, which were to be opened by investment firms for individuals and provided for a preferential tax regime subject to long-term investment.
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