Crypto enthusiasts often believe that their "bitcoin" is beyond the reach of the state. But let's see if the Ukrainian government can reach your digital wallet if you decide to "forget" about paying taxes.
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Can the state? Spoiler: it can.
Legally, if you earn money from crypto, whether it's trading, mining, or even HODLing, you are required to pay personal income tax (PIT) and military duty. According to Ukrainian law, cryptocurrency is no longer considered a "virtual phantom." It is equated to an "intangible asset."
And now the interesting thing: if you exchanged your bullion for hryvnia, bought a Tesla or, God forbid, an apartment - these transactions may attract the attention of the tax authorities.
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How can they find you?
1. Bank transfers. Have you withdrawn funds from Binance to a card? Congratulations, the bank has recorded the transaction. And if the amount is significant, the tax authorities may also be interested.
2. Monitoring exchanges. Yes, popular platforms like Binance or Coinbase have already begun to cooperate with government agencies.
3. Snitching. From neighbors to former business partners, you never know who might want to "share information."
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What happens if you "forget"?
1. Audit. The IRS will initiate an audit of your income. If it turns out that you have not declared your crypto income, you may be fined.
2. Fines and penalties. Failure to pay personal income tax is subject to a fine of up to 25% of the amount of unpaid tax, plus a penalty for each day of delay.
3. Criminal liability. If the amount of unpaid taxes exceeds 1 million UAH, this is already considered evasion on a large scale. And here not only fines are possible, but also a suspended (or real) term.
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Is it realistic to hold you accountable?
Yes, but it's not that simple. The state must prove that your income was actually derived from cryptocurrencies. If you use cold wallets, exchange tokens on anonymous platforms, or do not withdraw funds to fiat, proving your income is not an easy task.
However, if you are an active trader and your transactions go through centralized exchanges, the risks increase. Especially considering that Europe, Ukraine and other countries are gradually implementing AML (Anti-Money Laundering) rules for cryptocurrencies.
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What to do?
Declare your income. Yes, it's unpleasant, but it's safer.
Choose decentralized solutions. Cold wallets, DEXs, and Monero are still difficult to monitor.
Consult with lawyers. Tax legislation regarding crypto is not yet fully regulated, and this can be used to your advantage.
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Cryptocurrency promised freedom from the system. But now even your Bitcoins can be the reason for a long conversation with the tax office. So play smart, because the tax office is not the "bear" you should be angry with.
