Website Development in Accounting: Costs, Intangible Assets, Taxes

Website development in accounting: how to properly formalize, record, and tax

A website is not always an intangible asset. In accounting, it becomes an asset only when a business genuinely acquires property rights to the development result, expects future economic benefits from it, and can reliably determine the costs of creation or acquisition. If these conditions are not met, the costs are recognized as period expenses. For most companies, the decisive factor is not the mere fact of payment to the developer, but the content of the contract: what exactly is being created, what rights are transferred, when the result is put into operation, and how its value is confirmed. (Law of Ukraine)

In practice, this means the following: a custom-developed website with the transfer of property rights can be accounted for as an intangible asset; hosting, technical support, subscription to a SaaS builder, domain renewal, or minor updates are usually current expenses; a promotional or promo website that does not meet the criteria for recognizing an asset is not capitalized. If the website accepts online payments, it is necessary to separately check the requirements regarding RRO/PRRO, consumer information, personal data, and, if necessary, licensed activities. (Law of Ukraine)

What exactly is the object of accounting

From a legal perspective, a website is a collection of data, electronic information, objects of copyright, and other elements interconnected within a website address or account. Therefore, in accounting, the asset is usually not the "internet address" as such, but the intellectual property rights to a computer program, database, design, texts, images, other components, or a complex of such rights. NP(S)BO 8 explicitly includes copyright and related rights, particularly rights to computer programs and databases, in the group of intangible assets. (Law of Ukraine)

For accounting purposes, an intangible asset is recognized only when there is a probability of obtaining future economic benefits from its use and its cost can be reliably measured. If these criteria are not met, the costs are not recognized as an asset and are written off as expenses of the reporting period in which they were incurred. (Law of Ukraine)

When a website can be put on the balance sheet as an intangible asset

It is advisable to recognize a website as an intangible asset if the following conditions are met simultaneously:

• the enterprise has obtained a sufficient scope of property rights to the development result;

• the website or its software part will be used in economic activities to generate income or other economic benefits;

• the costs of creation or acquisition can be documentary confirmed and reliably estimated;

• the result is ready for its intended use. (Law of Ukraine)

The most typical examples when a website is reasonably accounted for as an intangible asset:

• online store, CRM cabinet, B2B portal, customer self-service service;

• corporate website with unique functionality that automates sales, order acceptance, customer service;

• mobile application or web platform to which the business has acquired property rights and uses as its own digital product. (Law of Ukraine)

When website expenses should not be capitalized

NP(S)BO 8 explicitly stipulates that expenses for advertising and product promotion on the market are not recognized as an intangible asset and are reflected as period expenses. Therefore, a promo page, landing page, or other digital product created primarily for an advertising campaign, without proper formalization of property rights and without independent usefulness as a separate asset, is usually not capitalized. (Law of Ukraine)

Likewise, the following should not be automatically recognized as an intangible asset:

• payment for a website template or builder without acquiring property rights;

• monthly subscription to a SaaS platform;

• one-time services for content filling, SEO promotion, advertising, administration;

• hosting, CDN, SSL, technical support after launch;

• minor modifications that do not create a new asset and do not increase future benefits from an existing one. (Law of Ukraine)

What documents are needed to make accounting safe

For businesses, the most significant risk is to pay for development but not receive sufficiently formalized property rights. The Copyright Law establishes that the disposal of property rights is carried out, in particular, under a contract for the creation by order and use of an object, a contract for the transfer of property rights, a license agreement, or other transaction. Such contracts must be concluded in written or electronic form. If the contract does not specify which rights are transferred, the un-transferred rights remain with the previous rightsholder. (Law of Ukraine)

A safe set of documents for the customer usually includes:

• a contract with a clear description of the result: website, source code, design, database, content, modules, API;

• technical task or specification;

• conditions regarding property rights: exactly which rights are transferred or granted, for what period, for what territory, whether the license is exclusive or non-exclusive;

• acts of acceptance and transfer of works and, if necessary, a separate act of transfer of property rights;

• documents confirming payment;

• an internal order on putting into economic circulation, the useful life, and the chosen depreciation method. (Law of Ukraine)

Separately, it should be noted that the law establishes a presumption of rights ownership to a website: in the absence of evidence to the contrary, the owner of a website is considered to be the registrant of the relevant domain name and/or the recipient of hosting services. But for accounting and tax purposes, this is not enough: to put an asset on the balance sheet, it is better to have contractual confirmation of property rights to the code, design, database, and other components. (Law of Ukraine)

How to form the initial cost

A purchased or created intangible asset is enrolled on the balance sheet at its initial cost. For an internally generated intangible asset, the initial cost includes direct labor costs, direct material costs, and other costs directly related to the creation of the asset and bringing it to a condition suitable for use, including payment for the registration of legal rights, depreciation of patents, licenses, etc. (Law of Ukraine)

In practical accounting, this means:

• costs for development, programming, testing, integrations, and other functionality that creates the asset itself can form the initial cost;

• costs related only to promotion, advertising, brand publicity, or current maintenance are not included in the initial cost;

• regular payments for hosting, domain, administration, subscriptions, and post-launch support are usually period expenses, not part of the asset. (Law of Ukraine)

Which accounts this is shown on

The Instruction to the Chart of Accounts stipulates that sub-account 154 "Acquisition (creation) of intangible assets" summarizes the costs of acquiring or creating intangible assets, and sub-account 125 "Copyright and related rights" accounts for rights to literary, musical works, computer programs, databases, etc. Therefore, the typical approach is as follows: until the completion of the work, costs are accumulated on 154, and after the object is put into economic circulation, they are transferred to 125. (Law of Ukraine)

Website depreciation

If a website is recognized as an intangible asset, its cost is subject to systematic allocation over its useful life. The enterprise independently determines the period of use and the depreciation method, taking into account the expected pattern of consumption of economic benefits, and at the end of the year reviews the period, method, and residual value. (Law of Ukraine)

The old approach, according to which any website is automatically depreciated in the same way, is incorrect. First, it is necessary to establish whether an asset has arisen at all, and only then determine its useful life. For a corporate or administrative website, depreciation usually falls under administrative expenses, and for a website that directly supports sales, it falls under the expenses of the department it serves. (Law of Ukraine)

Updates, modifications, technical support

Not every update increases the value of an intangible asset. If the works only maintain the website in a working condition — fixing errors, updating modules, backups, minor tweaks, extending hosting, support without creating new functionality — these are usually period expenses. If a significant modernization is performed, which adds new capabilities, changes the method of use, and brings additional future economic benefits, such costs can form the cost of a new or improved intangible asset, provided there are properly formalized rights and documents. (Law of Ukraine)

Most common situations

This approach follows from the recognition criteria of NP(S)BO 8, the list of costs that are not recognized as an intangible asset, and the requirement to clearly formalize property rights to the development result. (Law of Ukraine)

Corporate Income Tax

For corporate income tax payers, the base is the financial result according to accounting data, adjusted for tax differences in cases provided by the TCU. Payers with an annual income of not more than UAH 40 million can decide not to apply differences, except for specific cases expressly defined by the Code. Depreciation of intangible assets for tax purposes is carried out according to accounting rules, taking into account the restrictions of Article 138 of the TCU; at the same time, non-productive intangible assets are not subject to tax depreciation. (Law of Ukraine)

Therefore, for corporate income tax, the main question is the same as in accounting: whether the website is an asset used in business activities, or just period expenses. If the website is not used in business or is formalized only nominally, the tax risk increases. (Law of Ukraine)

FOP (Sole Proprietor): single tax and general system

For FOPs on the single tax, expenses for creating, buying, or maintaining a website do not reduce the taxable base for the single tax, since the object of taxation for such entrepreneurs is the income received. (Law of Ukraine)

For FOPs on the general system, the rules are different. The TCU explicitly states that expenses for the acquisition or independent production of fixed assets and the acquisition of intangible assets are not included in expenses directly; such expenses are subject to depreciation. At the same time, depreciation for FOPs is a right, not an obligation, and is kept in separate accounting. For group 4 intangible assets, the minimum useful life is determined by the title document but cannot be less than 2 years. (Law of Ukraine)

This means the statement "a FOP cannot account for a website in expenses at all" is too categorical. It is more correct this way: expenses for creating or acquiring an amortizable intangible asset are not written off immediately, but on the general system, they can be accounted for through depreciation according to the rules of Article 177 of the TCU. (Law of Ukraine)

VAT and non-resident developer

If the website is developed by a Ukrainian contractor, VAT consequences are determined by the general rules of Section V of the TCU. If the services are provided by a non-resident, the place of supply must be checked separately. For software development, supply, testing services, data processing, and IT services, the place of supply is usually the recipient's place of registration. Therefore, upon receiving such services from a non-resident by a Ukrainian customer, there may be consequences under Article 208 of the TCU regarding self-assessment of VAT if the place of supply is located in Ukraine. (Law of Ukraine)

Here it is especially important that the tax result depends on the wording of the contract: "custom development", "access to a service", "license", "technical support", "cloud service" can have different tax regimes. (Law of Ukraine)

If goods or services are sold through the website

The mere fact of having a website does not create a separate "website license". But if goods or services that require a license or other permit are sold through the website, they can be sold in e-commerce only after obtaining such a permit. Furthermore, the seller must provide on the website easy, direct, and stable access to information about themselves: name or full name, location, email address, tax number, price, information on the inclusion of taxes, delivery costs, and for licensed activities — details about the license. (Law of Ukraine)

If the website accepts card payments via internet acquiring or a payment service, this usually implies an obligation for the seller to use RRO/PRRO and issue a fiscal receipt. The State Tax Service (DPS) in its clarification of March 17, 2026, specifically emphasized: if the buyer pays through a payment system or a bank card on the website, it is the seller, not the payment intermediary, who applies the RRO/PRRO. At the same time, when a buyer transfers funds exclusively to the seller's current account using IBAN details, without using a card or payment service to initiate the settlement, RRO/PRRO is usually not applied. (sumy.tax.gov.ua)

Practical example: an online store accepts payment on the site via LiqPay or another acquiring service. For the buyer, this is a card payment, and for the seller, it is a settlement operation that needs to be fiscalized. If the client independently transfers funds from their account to the seller's account by IBAN through the bank, without card acquiring on the site, the approach is different and RRO/PRRO is usually not needed. (sumy.tax.gov.ua)

Since August 1, 2025, full sanctions for violating the rules for using RRO/PRRO are back in effect: 100% of the value of goods, works, or services for the first violation and 150% for each subsequent one. (lg.tax.gov.ua)

Personal data on the website

If the website collects applications, registrations, phone numbers, e-mails, delivery addresses, order history, or other user data, the business becomes a participant in relations concerning personal data processing. The law requires that the purpose of processing be specific and lawful, the data be adequate and not excessive, and its use for a new incompatible purpose require a separate legal basis. In the field of e-commerce, it is also expressly established that personal data cannot be used for purposes other than completing an electronic transaction, unless otherwise provided by law or agreement of the parties. (Law of Ukraine)

Therefore, a business website requires at least a clear privacy policy, a description of the purpose of data collection, properly organized access to data within the company, and contractual settlement with contractors who administer the website or have access to the customer database. (Law of Ukraine)

Most frequent business mistakes

The most dangerous practical mistakes are as follows:

• development has been paid for, but the contract does not transfer property rights;

• a "website" is placed on the balance sheet, although in essence only an access service to a builder was paid for;

• advertising, SEO, and promotion are included in the initial cost;

• maintenance costs are unjustifiably capitalized;

• the website accepts card payments, but the receipt is not fiscalized;

• the website lacks mandatory information about the seller, license, or delivery terms;

• personal data is collected without a clearly defined purpose and proper documents. (Law of Ukraine)

Conclusion

For Ukrainian businesses, proper website accounting starts not with journal entries, but with a correct formalization model. First, it is necessary to determine what exactly the company is buying or creating: its own digital asset, a license, access to a service, or a regular service. Then, to consolidate this in the contract, primary documents, and internal decisions of the enterprise. Only after this is it safe to decide what to capitalize and what to write off as expenses. (Law of Ukraine)

For Torgsoft and other companies operating in digital trade, the best protection is full control over the property rights to the website, a clean documentary base, separation of the asset from service payments, and proper fulfillment of requirements regarding e-commerce, personal data, and payment fiscalization. This is what reduces the risks of tax disputes, claims from counterparties, and fines from regulatory authorities. (Law of Ukraine)

Official sources

• NP(S)BO 8 "Intangible Assets", Order of the Ministry of Finance dated 18.10.1999 No. 242 — paras. 4, 6, 8, 9, 10, 17, 25-31. (Law of Ukraine)

• Instruction on the Application of the Chart of Accounts for Accounting, Order of the Ministry of Finance dated 30.11.1999 No. 291 — sub-accounts 154, 125. (Law of Ukraine)

• NP(S)BO 16 "Expenses", Order of the Ministry of Finance dated 31.12.1999 No. 318 — paras. 7, 18, 19, 20. (Law of Ukraine)

• Law of Ukraine "On Accounting and Financial Reporting in Ukraine" dated 16.07.1999 No. 996-XIV — Art. 1, Art. 9. (Law of Ukraine)

• Law of Ukraine "On Copyright and Related Rights" dated 01.12.2022 No. 2811-IX — Art. 1, Art. 12, Art. 48-50. (Law of Ukraine)

• Tax Code of Ukraine dated 02.12.2010 No. 2755-VI — Art. 134, Art. 138, Art. 177, Art. 186, Art. 208, subpara. 14.1.225. (Law of Ukraine)

• Law of Ukraine "On E-Commerce" dated 03.09.2015 No. 675-VIII — Art. 7, Art. 13. (Law of Ukraine)

• Law of Ukraine "On Personal Data Protection" dated 01.06.2010 No. 2297-VI — Art. 6. (Law of Ukraine)

• Law of Ukraine "On the Application of Registrars of Settlement Operations in the Sphere of Trade, Catering and Services" dated 06.07.1995 No. 265/95-VR — Art. 2, Art. 3, Art. 17. (Law of Ukraine)

• Order of the Ministry of Finance "On Approval of the Regulation on the Form and Content of Settlement Documents/Electronic Settlement Documents..." dated 21.01.2016 No. 13. (Law of Ukraine)

• State Tax Service of Ukraine, clarification on the application of RRO/PRRO when paying via the Internet and by IBAN details, 2026. (sumy.tax.gov.ua)