Taxes on labor within the Diia.City legal framework are a separate topic of discussion, as the legislator has decided to combine both existing forms of interaction between employers and employees as well as introduce new ones previously unknown to Ukrainian law.
The Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine” stipulates that a Diia.City resident can hire specialists under the following conditions:
- An employment contract
- A gig contract
- A “company-FOP” cooperation model
Each of these forms of cooperation has its own set of specific conditions.
Conditions of Cooperation within Diia.City
According to the tax and labor legislation of Ukraine, a regular employee working under an employment contract pays the following taxes to the state budget:
- Personal income tax (PIT): 18%
- Unified social contribution (USC): 22% of the salary
- Military tax: 5%
The total tax burden appears quite high, which is why employers seek ways to optimize it. To increase labor culture and encourage the transition to Diia.City, special conditions for IT specialists have been introduced regarding tax rates.
As of January 1, 2025, tax changes for Diia.City residents have come into effect in Ukraine. Specifically, for IT specialists working in Diia.City resident companies, the following tax rates apply:
- Personal Income Tax (PIT): 5% of income
- Unified Social Contribution (USC): 22% of the minimum wage
- Military Tax: 5% of income
Thus, the total tax burden for IT specialists amounts to 10% of income + USC at 22% of the minimum wage.
These changes are aimed at supporting the IT sector and creating favorable conditions for its development in Ukraine.
Taxation Conditions for Gig Specialists
The relevant law primarily defines gig specialists as individuals acting as contractors or service providers under a gig contract, which is a type of civil law agreement.
A gig contract is a special form of employment that combines features of both labor and civil law agreements. It represents a hybrid model that merges the flexibility of freelancing with social guarantees, while avoiding excessive tax obligations.
Additionally, the Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine” grants Diia.City residents the right to engage foreign nationals and stateless persons under gig contracts without requiring special permits.
A company signs a civil law contract, under which the specialist commits to performing tasks in accordance with the employer’s requirements.
As of January 1, 2025, new tax rules have come into effect for gig specialists working with Diia.City residents. These changes are regulated by Law No. 4113-IX dated 04.12.2024, “On Amendments to the Tax Code of Ukraine and Other Laws to Stimulate the Development of the Digital Economy in Ukraine.“
Key taxation aspects for Gig Specialists in 2025:
- Gig specialists’ income from Diia.City residents is taxed at a preferential rate of 5%. This rate applies from the month following the company’s acquisition of Diia.City resident status
- If a gig specialist’s annual income exceeds the equivalent of €240,000, the amount exceeding this limit is taxed at a rate of 18%
- 22% of the minimum wage
- The average monthly remuneration for employees and gig specialists must be at least the equivalent of €1,200.
- The average number of employees and gig specialists must be at least 9 people.
If a Diia.City resident fails to meet these requirements in a given month, they must calculate and pay PIT at a rate of 18% from their own funds.
FOP, Diia.City, and Limitations
Starting in 2025, restrictions on cooperation between Diia.City residents and individual entrepreneurs (FOP) under the simplified tax system will be introduced.
If a Diia.City resident’s annual revenue exceeds UAH 40 million, expenses on payments to FOPs must not exceed 20% of the company’s total expenses for the previous year.
If this threshold is exceeded, the excess amount is taxed at 9% for withdrawn capital taxpayers or included in the financial result for corporate income tax payers.
For Diia.City residents with annual revenues below UAH 40 million, there are no restrictions on cooperation with FOPs, allowing them to continue collaboration without additional tax implications.
These changes aim to promote transparency in business relationships and ensure social guarantees for IT professionals working in Ukraine.
Our team will be happy to provide advice on the Diia.City. We are available Monday to Friday from 9:00 AM to 7:00 PM. To receive a consultation, send your request through the form below, or message us on Telegram, Viber, or WhatsApp.
