Under the Ukrainian legislation, electronic services are the services provided automatically via the Internet by using information technologies and mostly without human intervention.

Electronic services may include the following:

• Supply of electronic copies, provision of an access to images, texts, and information, including subscription to electronic newspapers, magazines, books, downloading of photos, graphic images, videos, etc.;
• Provision of an access to databases, including the use of search systems and directory services;
• Supply of audio-visual works, videos on demand, games, card games, including the supply of services for participation in such games;
• Provision of an access to information, commercial, educational, and entertainment electronic resources and other similar resources;
• Supply of online learning services without human involvement;
• Provision of cloud technologies for data placement, etc.;
• Supply (transfer of rights of use) of software and updates thereof, as well as remote maintenance of software and electronic equipment;
• Provision of online advertising services, mobile applications, and other electronic resources.

Yes, electronic services for the purposes of VAT taxation do not include the following:

• Services ordered via the Internet, but provided without using the Internet;
• Supply of goods and/or other services, other than ESS, which incorporate ESS, if the cost of ESS is included in the total cost of such goods/services;
• Supply of online learning services with human involvement;
• Supply of copies of works in the field of science, literature, and arts on tangible media;
• Provision of consulting services by e-mail;
• Provision of the Internet access services.

The new VAT rules will apply to the supplies of electronic services by non-residents to Ukrainian individuals and to individual entrepreneurs not registered as VAT payers in Ukraine.

The new VAT rules will not apply to the supplies of electronic services by non-residents to Ukrainian businesses and individual entrepreneurs registered as VAT payers in Ukraine. Such services should be taxed by Ukrainian recipients under the reverse-charge mechanism.

Yes, penalties for non-registration or late registration will apply in the amount of 30 minimum wages established as of 1 January of the reporting year (since 1 January 2022, UAH 195 thousand, or EUR 6.1 thousand).

Unintentional late payment, partial payment or non-payment of VAT liabilities for less than 30 days from the payment deadline results in administrative penalty of 5% from the amount of paid tax debt.

Unintentional late payment, partial payment or non-payment of VAT liabilities for more than 30 days from the payment deadline results in administrative penalty of 10% from the amount of paid tax debt.

Intentional late payment, partial payment or non-payment of VAT liabilities results in administrative penalty of 25% from the amount of unpaid, partially unpaid or untimely paid tax liabilities.

In case the same violation is committed again within 1095 days or which led to the delay of payment for more than 90 days, it will result in administrative penalty of 50% from the amount of unpaid, partially unpaid or untimely paid VAT liabilities.

VAT liabilities arise on the last day of the reporting period in which the services are paid for.

VAT returns should be submitted on a quarterly basis.

Non-residents are not obliged to prepare and file VAT invoices. As regards payment (commercial) invoices on supplies of electronic services to Ukrainian individuals, they may be issued in any form, since the Tax Code of Ukraine does not establish any specific requirements.

VAT should be paid in EUR or USD to a special currency account in the State Budget of Ukraine.

Yes, they may, but only a VAT return will be subject to desk tax audit. Desk tax audit will be conducted by the tax auditors in the tax office on the basis of VAT returns of the non-resident taxpayer as related to the calculation of their VAT liabilities.