Card (account) blocking due to cryptocurrency transactions

For more than a year now, Ukraine has been discussing the legalization of cryptocurrencies and related transactions at all levels, including the legislative level. However, as of today, all legislative initiatives have unfortunately remained on paper, partially complicating the lives of ordinary citizens whose activities are somehow related to cryptocurrency transactions.

As a general rule, any income of a Ukrainian citizen should be subject to personal income tax and military duty. The total tax burden under this system is 19.5% of the income.

Thus, if you receive income from cryptocurrency transactions, you should be prepared to be taxed at a rate of 19.5% of all income received on your bank account or card.

In order to control the circulation of funds, Ukraine, as well as many other countries, has a financial monitoring system. The main task of financial monitoring is to counteract the legalization of proceeds of crime or terrorist financing.

The bank, as a subject of primary financial monitoring, controls the circulation of funds on accounts opened in this banking institution.

When performing financial monitoring functions and noticing suspicious account transactions, the bank may block the account and ask you to confirm the legality of the transaction or the legality of the funds received on such account. Therefore, a person subject to such control measures must confirm the legality of the origin of such funds. The problem is that the term "legality" includes, among other things, taxation of these funds.

The taxation and accounting of these funds is confirmed by the property and income declaration filed by such a citizen. However, such a declaration is submitted based on the results of the reporting period, which in this case is one calendar year.

Thus, if such an audit covers the previous reporting period, it is not difficult to confirm taxation. Instead, an audit that comes in the middle of the reporting period makes it impossible to properly confirm the taxation of such funds.

Timely appeal to lawyers and their involvement in solving your problem can help in this situation, because timely involvement of specialists increases your chances of an audit.

Prikhodko & Partners Law Firm has a large number of attorneys and accountants who are knowledgeable in tax, civil, banking and commercial law. The work of such a large staff of specialists will provide you with full protection of your rights and interests during financial monitoring activities. Fill out the form on our website and our lawyer will contact you as soon as possible.