Diia.City is a special legal and tax regime for IT companies in Ukraine that allows technology businesses to operate with a predictable tax burden, flexible models of cooperation with specialists, and clear business rules.
In this material, we will подробно review which taxes Diia.City residents pay, what tax models exist (9% or 18%), how salaries and gig contracts are taxed, and in which cases this regime is truly beneficial for IT companies.
Diia.City is a special legal regime for companies operating in the digital economy. It was created to make Ukraine a competitive jurisdiction for technology businesses and international IT companies.
Companies operating in the following areas can become Diia.City residents:
- software development
- SaaS products
- cybersecurity
- artificial intelligence and Big Data
- game development
- blockchain and fintech
- technology R&D
The main idea of the regime is that the state creates special conditions for technology companies: lower tax burden, a clear taxation model, and flexible forms of cooperation with teams.
Tax models for Diia.City residents
Diia.City residents can choose one of two tax models. The choice depends on the business structure, company development plans, and dividend policy.
1. Corporate Income Tax — 18%
This is the standard taxation model applied to most Ukrainian companies. The tax is paid on the financial result, i.e. the company’s profit. The formula is as follows:
Profit = Income – Expenses
The tax rate is 18%. This model is suitable for companies with significant operating expenses, those actively investing in product development, or those not planning to regularly distribute dividends.
2. Exit Capital Tax — 9%
An alternative model is the exit capital tax (ECT). In this case, the company does not pay income tax as long as the money remains in the business.
The tax is paid only when funds are withdrawn from the company, for example:
- dividend payments
- certain payments to non-residents
- non-repayable financial assistance
- certain transactions with related parties
The tax rate is 9%. This makes the regime particularly attractive for IT companies that actively reinvest profits into product development or business scaling.
Taxes on salaries and gig contracts
One of the key advantages of the Diia.City regime is a special model for taxing specialists’ income. Companies can cooperate with teams through employment contracts or gig contracts. The tax burden in these cases is the same:
Personal Income Tax — 5%
Military Tax — 1.5%
Unified Social Contribution — 22% of the minimum salary
An important feature is that the unified social contribution is calculated not from the actual income of the specialist, but only from the minimum salary. This significantly reduces the overall tax burden.
“Under the Diia.City regime, the total tax burden is approximately 7–8% of the specialist’s income, which is significantly lower than in the standard employment model.”
Criteria for Diia.City residents
To obtain Diia.City resident status, a company must meet certain requirements:
- average remuneration of specialists — not less than 1200 euros
- at least 9 specialists
- at least 90% of income from permitted IT activities
In addition, companies must submit a special Diia.City resident report and, in some cases, undergo an independent audit.
When the Diia.City regime is truly beneficial
Practice shows that the Diia.City regime is most effective for companies that:
- operate in IT or technology
- have a team of developers
- work with international clients
- plan to scale the business
- reinvest profits into product development
For such companies, Diia.City allows significant optimisation of the tax model and makes the business structure more transparent.
Conclusion
The Diia.City regime creates unique conditions for the development of technology businesses in Ukraine. The ability to choose between a corporate income tax of 18% and an exit capital tax of 9%, reduced taxation of specialists’ income, and flexible cooperation models make this regime one of the most attractive for IT companies.
However, to effectively use all the advantages, it is important to correctly choose the tax model, set up accounting, and take into account all legal requirements.
Acturon Consultation
The Acturon team helps IT companies obtain Diia.City resident status, choose the optimal tax model, organise accounting, and prepare the necessary reporting.
If you are planning to transition to Diia.City or want to assess the tax advantages of the regime, contact us for a consultation.
