Google tax in Ukraine: who should pay it?

Since January 1, 2022, the Law entered into force that equalized the taxation rules for Ukrainian and international technology companies. Thus, non-resident entrepreneurs who provide electronic services to Ukrainians must pay to the state budget a “Google tax” of 20% on income from the sale of software, games, films, advertising, cloud storage, etc.

What is a non-resident company?

A non-resident company — is a foreign enterprise (legal entity) that is established and located in another country and operates under its laws but provides services to citizens of Ukraine.

Who is obliged to pay the Google tax?

Paying the tax to Google is mandatory for all foreign companies that provide online services to Ukrainian consumers and are not Ukrainian tax residents. Under the Law, such enterprises must pay 20% VAT to the Ukrainian budget.

The legislative norm applies to all companies that provide digital services in Ukraine to both individuals and Sole Proprietorships that are not registered as VAT payers.

List of electronic services taxed in Ukraine

• hosting and cloud services,

• search engines,

• gaming platforms,

• streaming services,

• databases,

• social networks,

• distance-learning platforms,

• services for creating and distributing internet advertising,

• software supply (software).

An exception — services whose end product is not electronic. For example, accommodation booking services, video communications, taxi services, etc. The list also includes the following categories:

• passenger transport services,

• car accommodation and rental,

• food supply,

• consultations by e-mail,

• providing access to the internet.

The key factor for taxing services is that the end consumer must be located in the territory of Ukraine.

VAT payment and reporting for non-residents

The tax authority explains how non-residents can file the Declaration and pay VAT:

1. Go to the official website of the State Tax Service of Ukraine.

2. Select the “Create an account” section.

3. Register as a VAT payer.

In the account, you can generate and submit a simplified VAT tax return and an adjustment calculation of tax liabilities.

To create the Declaration in the e-cabinet, select:

• the year for which the document is prepared,

• the reporting tax period.

To complete the Declaration form, provide the following data:

• the name of the non-resident person,

• the individual tax number of the registered taxpayer,

• the foreign currency in which the tax will be paid,

• the contract value of electronic services provided,

• the amount of VAT to be paid to the state budget.

After completing all fields, save the document and send it to the tax authority for further processing.

If an error occurs during completion, the field will be highlighted in red.

After sending the generated document, the user will receive two receipts: the first — a notice that the STS has received the Declaration, the second — a notice of its acceptance.

Frequently asked questions

What to do if the non-resident’s details change?

If your registration details change, you must submit to the STS of Ukraine an application marked “Re-registration as a taxpayer (changes to registration details)”.

Where to find the bank account details for VAT payment?

Current foreign-currency account details can be found in the e-Cabinet on the STS website under “Settlement status with the budget”.

Which non-resident companies pay VAT?

First of all, these are large companies such as Apple, Google, Meta, Sony, Etsy, Netflix, Wargaming, eBay and others whose annual income from providing electronic services to Ukrainian citizens exceeds UAH 1 million.