Taxation of Diia.City Residents: Rates, Limits, Exit Capital Tax vs Corporate Income Tax
Taxation in Diia.City is not just a “light IT regime,” but a full-scale tax model that allows companies to reduce the tax burden and work flexibly with specialists. In 2025, the rules for residents have been partially updated: rates and criteria have changed, new limits have been introduced, and special benefits for startups have appeared. In this guide, I explain in detail which taxes Diia.City residents pay, the difference between Corporate Income Tax and Exit Capital Tax, how the key limits work, and what to do to keep the right to preferential tax rates.
Diia.City is not just another “government initiative,” but a real tool for IT companies that want to work legally, with flexible collaboration formats and transparent taxation. Every business that works with developers, designers, analysts, or product managers should consider the question: “Is Diia.City right for us?”
In this guide, we explain how taxation in Diia.City works, which tax rates apply to specialists and companies, how limits operate, what benefits exist for startups, and compare Exit Capital Tax with the classical model. We provide practical examples of when residency is beneficial and when it’s better to stay with the familiar cooperation model using sole proprietors.
If you still have questions after reading – don’t act blindly. Consulting an accountant or tax lawyer will help tailor solutions to your specific business and avoid unpleasant surprises.
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Who can work in Diia.City? Taxation specifics
The cooperation model in Diia.City differs significantly from traditional employment relations. It’s not only about the type of contract – it’s a balance between employee protection and business flexibility. Since early 2025, certain tax changes were introduced for IT specialists working in Diia.City resident companies. What will happen next year and whether additional changes will come – we do not yet know, but we will continue to monitor it together.
Currently, the personal income tax rate is only 5% of the income amount, and the unified social contribution (USC) is 22% (and calculated not from the full salary, but only from the minimum wage).
For example, you may receive even 100,000 UAH per month, but the USC remains fixed.
An additional military levy of 5% is also withheld. These rates are established by Law No. 4113, which amended the Tax Code to support the digital economy.
Important: the reduced 5% tax rate does not apply automatically – it starts from the month following the company’s acquisition of Diia.City resident status.
If a specialist works in a Diia.City resident company under a regular employment agreement, the following rates apply:
Example: imagine you receive, for instance, 60 thousand UAH net, but in reality your employer pays over 15 thousand UAH in taxes for you every month! That’s a significant hit to the budget. That’s exactly why the IT field has special simplified conditions, so companies are motivated to work “officially”, and specialists aren’t looking for ways to “bypass the system”.
Additionally, Diia.City companies have access to different cooperation models: classic employment contract, gig-contract, or private entrepreneur (FOP) – each with its own set of terms and benefits. This approach really reduces the tax burden for IT specialists and companies, making cooperation highly flexible. A gig-contract is something between full employment and freelancing. On one hand, a person has social protection, and on the other – can work flexibly without strict labor code constraints.
Personal Income Tax (PIT) in Diia.City
For Diia.City residents, the personal income tax rate is 5% instead of the standard 18%.
This key benefit applies only if the following criteria are met:
- average monthly income – at least 1,200 EUR (at the NBU exchange rate);
- a team of at least 9 specialists (employees or gig-specialists).
The 5% preferential rate applies to:
- salary;
- gig-contract remuneration (including creation of intellectual property and transfer of rights);
- royalties for commissioned works.
Exceptions:
- Paid time-off for gig-specialists (vacation equivalent) is NOT included in the base – it is taxed at 18%.
- Gifts to employees or gig-specialists up to 2,000 UAH per month are NOT taxed; anything above that is considered an additional benefit and taxed at 18%.
- Total annual remuneration cannot exceed 240,000 EUR (converted at the rate on January 1). Any excess is taxed at 18%.
Unified Social Contribution (USC) for Diia.City residents
USC is calculated using a preferential rule – 22% of the minimum wage, not the actual salary.
This applies only if a company maintains Diia.City qualification criteria, including:
- minimum required headcount (at least 9 specialists);
- average remuneration of at least 1,200 EUR;
- no tax debt exceeding 10 minimum wages (in 2025 – 80,000 UAH) for more than 30 days.
If the company doesn’t meet the criteria in a given month – it must pay the difference between 18% and 5% PIT for that period.
Example:
To understand the difference, let’s take the same amount – 80 thousand UAH remuneration.
As a result, there is a savings of over 26,000 UAH per specialist each month.
Standard Tax System vs Diia.City
PIT
Military levy
USC (Unified Social Contribution)
Total taxes
18% × 80 000 = 14 400 UAH
5% × 80 000 = 4 000 UAH
22% × 80 000 = 17 600 UAH
36 000 UAH (45%)
5% × 80 000 = 4 000 UAH
5% × 80 000 = 4 000 UAH
22% × 8 000 = 1 760 UAH
9 760 UAH (12,2%)
Can foreign specialists work under Diia.City?
Another interesting feature of Diia.City: companies can officially engage not only Ukrainians but also foreign specialists and even stateless persons. At the same time, there is no need to obtain a separate work permit for each person, which makes Ukrainian IT companies competitive even compared to the EU market.
How it works: the company signs a civil law contract or a gig contract under which the specialist undertakes to perform work according to the client’s tasks. And all such payments – salary, gig-contract fees, or even royalty for creating an IT product – are taxed at a single favorable rate of 5%.
For example: if you are a designer and you create unique software or graphics for a company – you can receive a royalty under an author’s contract, and it will also be taxed at the preferential rate.
Special tax conditions for startups
From 01.01.2025, subparagraph 170.14-1.6 of the Tax Code of Ukraine allows Diia.City startup residents to pay PIT at a 5% rate and SSC at 22% of the minimum wage if their average number of employees and gig specialists is less than nine, but they meet the requirement for the average monthly remuneration (at least the equivalent of 1,200 euros at the official exchange rate of the hryvnia to the euro).
What this means:
- during the first period (until the end of the year following the year of acquiring residency), the company may temporarily fail to meet the requirement of at least 9 specialists;
- SSC is paid at the level of the minimum insurance contribution – 22% of the minimum wage.
How it works:
- during the month when Diia.City residency is obtained, the company can immediately use the benefits for paying gig specialist remuneration. For employees, the standard 18% PIT rate applies until the 1st day of the month following the month when residency is obtained.
- From the 1st day of the next month, the company may apply 5% PIT and the minimum SSC for employees;
However, there is an important nuance – if after the preferential period ends the company still does not meet the requirement for the number of specialists, it will have to pay the difference between the preferential and standard rates for the last three months of the following calendar year. In other words, the difference must be paid at the 18% PIT rate (instead of 5%) and the corresponding SSC – 22% of the actual salary (or 8.41% for employees with disabilities in certain cases). The good news – no penalties apply to these additional charges.
Startups also pay the 5% military levy, same as all other Diia.City residents.
If it feels complicated – delegate your accounting to professionals
Our experienced accountants will analyze your business, consider all the nuances, and ensure full order in your reports and taxes.
Corporate Income Tax (18%) vs Exit Capital Tax (ECT, 9%) – which one to choose
Diia.City residents can operate under two tax systems:
- Corporate income tax – 18%,
- or Exit Capital Tax (ECT) – 9%.
What is the difference?
| Indicator | Corporate Income Tax (18%) | Exit Capital Tax (ECT, 9%) |
|---|---|---|
| Tax base | Financial result: revenue minus expenses | Only specific types of payments: dividends, royalties, interest, penalties, free-of-charge transfers, compensations, etc. |
| If the company has losses | Tax = 0 | Tax still applies when funds are withdrawn |
| Who benefits most | Companies that regularly generate profit and rarely distribute it | Companies that reinvest profit or distribute funds periodically |
How to switch between regimes?
From corporate income tax to ECT – file an application no later than 15 calendar days before the start of the next quarter.
From ECT to corporate income tax – file an application no later than 10 calendar days before the start of the new year.
New rules and exceptions from 2025:
- From 25.03.2025, a new taxable object for ECT payers: transactions involving unlawful benefits provided to an official are taxed at an 18% rate.
- Humanitarian/charitable aid for the Armed Forces of Ukraine, National Guard, Security Service, Foreign Intelligence Service, etc. – exempt from ECT during martial law.
- Starting 2025, ECT payers may exclude company contributions to voluntary medical insurance and non-state pension programs for employees/gig specialists – within the limit of 30% of salary/remuneration.
Buh.ua tip: before choosing a tax regime – calculate the real cash flows (especially regular payments to individuals) and consult with an accountant or tax expert to avoid unpleasant surprises.
Limits and Special Taxation Rules in Diia.City
Diia.City tax benefits apply only when a company complies with the rules. Limits on cooperation with private entrepreneurs (FOP), revenue thresholds, and gig-remuneration caps must be monitored to avoid extra taxation.
Limit on cooperation with FOPs for large residents – 40 million UAH
Starting from 2025, if the annual revenue of a Diia.City resident exceeds 40 million UAH, expenses for services provided by FOPs must not exceed 20% of total expenses of the previous year.
Exceeding this threshold leads to additional taxation:
- 9% for Exit Capital Tax payers (ECT),
- or inclusion of the excess in the financial result under the standard corporate income tax system.
Example: if the company’s expenses last year amounted to 100 million UAH, no more than 20 million UAH may be spent on FOPs. Everything above this amount is subject to additional taxation.
Tax benefit for companies with revenue up to 40 million UAH
Diia.City residents with annual revenue ≤ 40 million UAH are not subject to the 20% limit on expenses related to cooperation with FOPs and other single tax payers. Such companies may engage FOPs without restrictions and without additional taxation.
Additionally, according to the Tax Code, such companies have the right not to adjust their financial results for tax differences.
Newly established residents
Newly registered companies calculate the share of expenses on FOPs and simplified-tax LLCs based on current reporting period figures, not the previous year. Thus, during the first year of operation, comparison is made against the current period performance.
Example: revenue in 2025 – 38 million UAH, expenses on FOPs and simplified-tax LLCs – 8 million UAH, which is more than 20% – but the company does not need to apply additional taxation if this is properly reflected in reporting.
Gig-specialist annual income limit – €240,000
If a gig-specialist’s annual income exceeds €240,000, all income above this threshold is taxed at the standard PIT rate of 18%. The specialist must include the excess amount in the annual income declaration and pay the tax personally.
Example: if you earned €260,000 – the tax benefit applies to €240,000, and 18% PIT must be paid on the extra €20,000.
Taxation specifics when working with FOP/LLC under the simplified tax system
There is a conditional limit – 20% of the company’s total expenses for purchasing assets, works, or services from single-tax payers (FOPs or simplified LLCs). This percentage is calculated based on the Financial Results Report and applies both to corporate income taxpayers and Exit Capital Tax (ECT) taxpayers. Ask yourself: are more than one-fifth of your expenses paid to FOPs? If yes – be ready for tax adjustments.
What happens if the limit is exceeded?
For ECT taxpayers, the excess above 20% is taxed at a rate of 9%. For corporate income taxpayers, the excess must be included as an adjustment to the financial result of the previous year and taxed at a rate of 18%.
Example: If annual FOP expenses amount to 3 million UAH and total company expenses are 10 million UAH, the 20% rule allows spending up to 2 million UAH on single-tax payers with no consequences. The excess 1 million UAH will be taxed as follows: 9% for ECT taxpayers (i.e. 90 000 UAH), or 18% for corporate income taxpayers (i.e. 180 000 UAH).
How to avoid exceeding the limits
If the share of FOP expenses is high, companies must either restructure costs or be prepared for additional tax charges. For businesses with annual revenue up to 40 million UAH, no such limits apply – however, expense structure should still be monitored and correctly documented in reporting.
buh.ua advice: before heavily engaging FOPs, calculate what percentage of total expenses they will represent to avoid unpleasant surprises in tax reporting.
Taxation in Diia.City – your mini-guide
To stay on track and avoid confusion, here is a short checklist of the key rules:
- Personal Income Tax for Diia.City residents – 5%, SSC – 22% of the minimum wage, Military levy – 5% (applies starting from the month following the acquisition of resident status).
- Gig-income limit: €240,000 per year – any amount above is taxed at 18%.
- Conditions for tax benefits: average monthly remuneration ≥ €1,200 and team size ≥ 9 specialists. If these requirements are not met for any month – the company must pay the difference between 18% and 5% for that month, and SSC is charged from the actual remuneration.
- Limit for cooperation with FOPs for large companies: if annual revenue exceeds ₴40 million, expenses for FOPs must not exceed 20% of total expenses for the previous year; excess amount is additionally taxed (9% for ECT taxpayers or included in the financial result under the regular system).
- Companies with revenue ≤ ₴40 million may choose once in consecutive years not to adjust the financial result – this must be reflected in tax reporting. New residents calculate the share of expenses paid to simplified taxpayers for the current year.
- Startups up to 2 years old with revenue ≈ ≤ ₴9.3 million have temporary relief regarding the number of specialists and may pay SSC only as the minimum contribution; if after the grace period the requirement is not met – the tax difference for the last 3 months of the following year must be paid (no penalties are applied).
Not sure what to choose?
A short call with a tax advisor may save you weeks of time and thousands of hryvnias. Ask everything – even if a question seems “silly”. That’s exactly how correct decisions are found.
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