On January 31, the National Anti-Corruption Bureau (NABU) and the Specialized Anti-Corruption Prosecutor's Office (SAP) reported suspicion of entering false information into the declaration for 2020 to the current people's deputy of Ukraine.
According to the investigation, he declared crypto assets with a market value of more than 24 million hryvnia. However, NABU and SAP claim that the cryptocurrency wallet that the people’s deputy included in the declaration never actually belonged to the latter.
This case highlighted the importance of correctly declaring crypto assets. The editors of Incrypted talked about this with Alexander Melnik, a lawyer in the Business Security practice at Juscutum.
According to him, if you are a person authorized to perform the functions of the state or local government, you have the obligation to declare the presence of your own property, including cryptocurrency.
Lawyer of the Business Security practice at Juscutum
The issue of declaring cryptocurrencies by ordinary citizens remains open. Today, cryptocurrency does not have a specific legal status in Ukraine; in particular, there is no regulatory framework for its classification and regulation of operations with it. Taking these aspects into account, we can state that the current legislation does not provide for the declaration of cryptocurrency for individuals.
It should be noted that separate legislation on the taxation of cryptocurrencies in Ukraine has not yet been approved. At the time of writing, there are two versions of the draft law on introducing relevant changes to the Tax Code. You can read more about them in the Incrypted materials:
However, both deputies of the Verkhovna Rada and representatives of the National Bank say that none of the proposed bills will be adopted in their current form. Therefore, there is still no clear understanding of exactly how and what taxes will be levied on crypto transactions for the majority of Ukrainians.
According to Melnyk, if the subject of the declaration has cryptoassets, when filing a declaration, one should remember the need to include them in the “Intangible Assets” section. At the same time, information should be reflected not only on cryptocurrencies owned by the declarant himself, but also by members of his family as of the last day of the reporting period.
The lawyer pointed out the risks of storing crypto assets in wallets if you are the subject of the declaration. Among them, the expert identified the following:
- when declaring, a public wallet address is indicated, which in the future may become the target of spam, phishing attacks, or even persecution;
- inability to confirm the legal origin of cryptoassets declared by a person;
- Cryptocurrency prices can change rapidly. This means that the value of a subject's crypto assets may fluctuate dynamically over a short period of time, which may affect their value and financial condition;
- the person and his assets are of increased interest from tax services and law enforcement agencies;
- public disclosure of assets can cause reputational and career obstacles to your activities.
Subjects of the declaration should remember and store all relevant information and documents on financial transactions related to cryptocurrencies, Melnyk emphasized. According to him, these can be electronic or paper receipts confirming each transaction:
“Doing so can make your life a lot easier if questions arise regarding the source of funds.”
The Juscutum lawyer noted that keeping a log of cryptocurrency activities to collect information can be useful.
“The more information you retain, the more confident you will feel. If you have any doubts about the appropriateness of the source of funds or if you need help preparing an explanation, consider consulting a lawyer or financial advisor.” — noted the expert.