On January 1, 2015, changes in the Tax Code of Ukraine regarding the accrual of personal income tax came into force.

According to the Law “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine Concerning Tax Reform” of December 28, 2014, the rate of personal income tax received in the form of interest on deposits is changed. From 01.01.2015 the total amount of two interest taxes on deposits is 21.5%. The tax agent of an individual investor is a financial institution. And it is financial institutions – whether a bank, credit union and others, are obliged to withhold and pay taxes on income received in the form of interest on deposits.

The increase in the tax rate from 15% to 21.5% was due to two components:

  1. 20% of the income of individuals when accruing interest on deposit and other accounts. This type of tax was first introduced in Ukraine in August 2014. By the end of 2015, the tax rate was 15% and from 01.01.2015 it was increased by 5% to 20%.
  2. 1.5% of the Military tax on income of individuals when accruing interest on deposit and other accounts. This tax will be valid until the decision to complete the reform of the Armed Forces of Ukraine enters into force.

In European countries and in the world in general, many countries introduce personal income tax when accruing interest on deposit and other accounts. In most developed countries there is a rule: – there is income, you have to pay tax. Compared to similar taxes in other European countries, for example in Portugal it is 28%, in France – up to 18%, in Ireland – 25%.