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 regime was refined by Law No. 4113-IX, and in 2026 the rates and criteria did not change. 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
Working arrangements in Diia.City differ considerably from classic employment. It is not just the name of the contract; it is a balance between protecting the specialist and giving the business flexibility. The tax regime for residents was refined from 2025 by Law No. 4113-IX, and in 2026 the rates and criteria did not change. Below is what applies now.
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.
A military levy of 5% of income is withheld on top. The regime itself was introduced by Law No. 1946-IX of 14.12.2021 and refined by Law No. 4113-IX of 04.12.2024, while the 5% military levy rate was set by Law No. 4015-IX of 10.10.2024.
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:
For comparison, the general system. Imagine an employee takes home UAH 60,000. For that, the employer has to accrue about UAH 77,900 (23% of which is withheld as tax) and then pay another 22% social contribution on top - more than UAH 17,000 every month. That is exactly why IT got separate terms, so that companies find it worthwhile to work fully above board.
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:
- an average payment of at least the equivalent of EUR 1,200 per month;
- a team of at least 9 specialists (employees or gig specialists), with an exception for startups;
- at least 90% qualified income - for the first three full months and then for each calendar year (clause 4, part 1, Article 5 of Law No. 1667-IX).
The 5% preferential rate applies to:
- salary;
- gig-contract remuneration (including creation of intellectual property and transfer of rights);
- royalties for commissioned works.
Exceptions:
- A gig specialist's paid break (the equivalent of leave) - according to the tax authority's position of 16.07.2025 it is not remuneration for work performed and is taxed at 18%. The Tax Code has no direct rule on this, so it is worth getting an individual tax ruling for your own situation.
- Gifts to employees and gig specialists of up to UAH 2,161.75 per month in 2026 (25% of the minimum wage) are exempt from personal income tax, but the 5% military levy is still withheld. Anything above that is an additional benefit taxed at 18%, with a gross-up coefficient for non-cash gifts (clause 164.5 of the Tax Code).
- The EUR 240,000 annual limit - the total salary or remuneration of a specialist in hryvnia equivalent as of 1 January. The excess is taxed at 18%.
- Defence City residents. A Diia.City resident that also holds Defence City resident status cannot apply the 5% personal income tax and the minimum social contribution (amendments by Law No. 4577-IX of 21.08.2025).
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 2026 - 86 470 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% × 8 647 = 1 902,34 UAH
9,902.34 UAH (12.4%)
Can foreign specialists work under Diia.City?
Another advantage of Diia.City is that companies can engage foreign specialists and stateless persons. For a gig contract no separate work permit for a foreigner is needed. For an ordinary employment contract with a foreigner, however, the permit is required, just as for any other company.
How it works: the company signs an employment contract or a gig contract. The 5% rate applies to three types of payments, and the list is closed - salary, gig contract remuneration and author's remuneration for a work made for hire (clause 170.14-1.2 of the Tax Code). Payments under an ordinary civil law contract do not qualify - they are taxed at 18% income tax plus 5% military levy.
For example, a designer who is an employee or gig specialist creates graphics for the company as a work made for hire and transfers the rights to it. Author's remuneration for such a work is taxed at 5%. A fee under any other author's agreement falls under the general rules.
Special tax conditions for startups
Since 01.01.2025, clause 170.14-1.6 of the Tax Code allows Diia.City startup residents to pay 5% income tax and the minimum social contribution even if they have fewer than 9 employees and gig specialists. The condition is meeting the average payment requirement of at least the equivalent of EUR 1,200.
What this means. Until the end of the year following the year the status was obtained, a startup may temporarily fall short of the 9-specialist minimum. A startup is a company registered no earlier than 24 months before the application, with income within the group 3 single tax limit - UAH 10,091,049 in 2026.
The first month. In the month the status is obtained, all three types of payments - salary, gig remuneration and author's remuneration - are taxed at 18% (last paragraph of clause 170.14-1.2 of the Tax Code). The 5% rate and the minimum social contribution apply from the 1st day of the following month. This rule is the same for all residents, not only startups.
If the requirement is not met. After the preferential period, a company without 9 specialists pays the difference between the preferential and standard rates for the last three months of the year following the year the status was obtained: 18% income tax instead of 5% and a 22% social contribution on the accrued salary. The law explicitly waives penalties on this top-up only for the social contribution (part 14-1, Article 8 of Law No. 2464-VI); for income tax it is safer to rely on tax authority clarifications.
Startups pay the 5% military levy just like other residents.
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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.
What else to know about the tax on withdrawn capital:
- Since 25.03.2025 a new taxable item has been added for payers of the tax on withdrawn capital: providing an unlawful benefit to an official is taxed at 18%.
- Humanitarian and charitable aid to the Armed Forces, National Guard, SBU, Foreign Intelligence Service and other formations is exempt from the tax on withdrawn capital for the duration of martial law - this is a wartime rule in force since 2022 (clause 63-1, subsection 4, section XX of the Tax Code).
- A Diia.City resident's contributions under voluntary health insurance and non-state pension agreements within 30% of the accrued salary or remuneration are not included in the individual's taxable income (clause 164.2.16 of the Tax Code). This is a personal income tax benefit rather than a benefit under the tax on withdrawn capital, and it has applied since 2022.
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 cases of taxation in Diia.City
Diia.City benefits only work while the company follows the rules. The limit on working with sole proprietors and the specialist remuneration limit are the things to monitor to avoid additional tax.
The 20% limit on working with sole proprietors - for all residents
Spending on works, services and assets purchased from single tax payers must not exceed 20% of total expenses for the previous year. The rule applies to all Diia.City residents regardless of income. The excess is taxed:
- for payers of the tax on withdrawn capital - as a separate taxable item at 9% (clauses 135.2.1.15 and 141.9-1.2.12 of the Tax Code), from the very first hryvnia of income;
- under the general system - as a tax difference that increases the financial result (clause 140.5.17 of the Tax Code).
The UAH 40 million threshold is a common misconception. UAH 40 million is the low-income criterion from paragraph 8 of clause 134.1.1 of the Tax Code. It allows a corporate profit tax payer to decide not to apply tax differences - in which case the restriction of clause 140.5.17 does not affect it. The decision can be made no more than once during a continuous series of years in each of which income does not exceed UAH 40 million, and it is stated in the tax return for the first year. This exception does not extend to payers of the tax on withdrawn capital: a company on that regime that believes "there is no limit below 40 million" will underpay 9% on the excess.
Calculation example
The company's total expenses for the previous year were UAH 10 million, so up to UAH 2 million can be spent on single tax payers. Actual spending was UAH 3 million, an excess of UAH 1 million. A payer of the tax on withdrawn capital pays 9%, that is UAH 90,000. A corporate profit tax payer adds UAH 1 million to its financial result and pays 18%, that is UAH 180,000, unless it has decided not to apply tax differences.
Newly formed residents
New companies registered in the current year calculate the share of spending on single tax payers based on the current reporting period rather than the previous one.
Specialist income limit - EUR 240,000 per year
The limit applies to both employees and gig specialists (clause 170.14-1.3 of the Tax Code). If a specialist's total annual salary or remuneration exceeds EUR 240,000, everything above it is taxed at 18%. The specialist declares this amount in the annual return and pays the tax personally.
Example: a specialist received EUR 260,000 - the benefit applies to EUR 240,000, and 18% income tax is due on the EUR 20,000 above the limit.
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.
Resident reporting and employee reservation
Annual compliance report
Every year no later than 1 June a resident submits to the Ministry of Digital Transformation an annual report on compliance with Article 5 of Law No. 1667-IX together with an independent opinion of an audit firm (part 3, Article 13). The initial report is due no later than the last day of the sixth month after obtaining the status. A missed report is grounds for losing the status, and the preferential rates with it. How to obtain the status and what the application requires is covered in our article on how to register a Diia.City resident.
Resident status is a separate ground for reservation
A Diia.City resident that meets the EUR 1,200 average payment requirement can be designated a critically important enterprise and reserve employees from mobilisation (subclause 7, clause 2 of the Criteria under CMU Resolution No. 76, version of 01.09.2026). Compliance is now confirmed with tax filings for the last 6 months. Details, limits and salary conditions are in our article on employee reservation.
Taxation in Diia.City - your mini guide
To keep the details straight, here is a short checklist:
- 5% income tax, 5% military levy, minimum social contribution (UAH 1,902.34 in 2026). In the month the status is obtained all payments are taxed at 18%; the benefit applies from the next month.
- The 5% rate covers only salary, gig remuneration and author's remuneration for a work made for hire. An ordinary civil law contract is 18% plus 5%.
- The EUR 240,000 annual limit per specialist - 18% above it.
- Resident conditions - average payment from EUR 1,200, at least 9 specialists, 90% qualified income. Missed for a month - top-up of the 18% vs 5% difference and the social contribution on the actual remuneration.
- The 20% limit on sole proprietors applies to all residents. Under the tax on withdrawn capital the excess is taxed at 9% from the first hryvnia. Under the general system a company with income up to UAH 40 million may decide not to apply tax differences.
- Startups - until the end of the year after obtaining the status they may have fewer than 9 specialists; if they do not meet the requirement, a top-up for the last 3 months.
- Every year by 1 June - a compliance report to the Ministry of Digital Transformation with an auditor's opinion.
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