How to register in Diia.City? Requirements for joining Diia.City for IT companies

In this article, you will find out what Diia.City is, the main advantage of this initiative, and how it can be of interest to those interested in innovations and opportunities in the IT sector. Here you will find comprehensive information on the terms of registration in Diia.City, preferential taxation and other aspects that make this regime attractive to modern IT entrepreneurs and professionals.

What is Diia.City?

Diia.City is a special tax and legal regime created to stimulate the development of IT business in Ukraine. This initiative is aimed at attracting foreign investment, developing the technology industry and ensuring the competitiveness of the Ukrainian IT sector in the global market. Residency in Diia.City provides access to numerous benefits, including reduced tax burden and simplified business processes for companies and professionals working in this area.

Benefits of residency in Diia.City

One of the key advantages of residency in Diia.City is tax benefits. Companies that have become residents of Diia.City enjoy a special tax regime.

Corporate taxes

A company resident in Diya.City has to pay 9% exit capital tax instead of the usual 18% corporate tax. While the tax base for corporate income tax is the entire profit of the company, in the case of exit capital tax, it is only the part of the profit that will be withdrawn, for example, through the distribution of dividends.

Taxes on dividends

There is also a favourable tax regime for shareholders, as the tax rate on dividends is 0%, provided that they are distributed no more than once every 2 years. For comparison, under the general taxation system, this rate is 5% for residents and 9% for non-residents, unless otherwise provided by a double taxation treaty.

Labour taxes

The resident will be entitled to preferential rates of labour taxes, which he will pay for employees and gig workers, namely: 5% personal income tax (instead of 18%); 22% unified social tax (on the minimum wage, regardless of the amount of income), and 1.5% military duty.

Requirements for joining Diia.City

A legal entity registered in Ukraine in accordance with the procedure established by law, regardless of its location and place of business, may become a resident of Diia.City. The requirements for an applicant for Diia.City residency are set out in Article 5 of the Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine”.

In particular, the company must meet the following requirements:

• operate in the IT sector, carrying out one or more of the activities provided for in Article 5 of the Law,
• have at least 9 employees or gig/specialists,
• the average salary of employees of gig specialists should be at least EUR 1200,
• at least 90% of the company’s total income must be qualified income, i.e. income derived from activities in the IT sector (such activities are defined in Article 5). This includes income from the sale of products (goods, works, services) and royalties.

It is not necessary to meet all the requirements to become a Diia.City resident: a company may not meet the criteria for salary and average number of employees until 31 December of the calendar year following the calendar year in which it became a Diia.City resident. In addition, no financial statements, special permits or licences are required when applying.

A company cannot become a resident of Diia.City:

1. that has violated the requirements of the legislation on disclosure of information about the ultimate beneficial owners and/or submission of information on the ownership structure of a legal entity;
2. a direct or indirect owner of shares (stocks) in the authorised (share) capital of which is an aggressor state, or a legal entity registered in accordance with the laws of such a state, or an individual who permanently (mainly) resides in such a state,
3. in the authorised capital of which 25 per cent or more of the shares are owned directly or indirectly by legal entities registered in countries included by the Financial Action Task Force on Money Laundering (FATF) in the list of countries that do not cooperate in combating money laundering;
4. is subject to special economic or other restrictive measures (sanctions) or is a related party of a person subject to such restrictive measures (sanctions);
5. declared bankrupt;
6. which is in the process of liquidation, except for transformation;
7. that has a tax debt for more than 30 days, the total amount of which exceeds 10 minimum wages (as of 2023, this is UAH 67,000);
8. that is a provider of services related to the circulation of virtual assets and has not fulfilled the requirements of the law regarding inclusion in a certain register, registration, obtaining a licence or other permit document (if such requirements are established by law as a condition for the provision of relevant services);
9. that carries out activities related to organisation and/or conduct of gambling, except for activities related to provision of gambling services.

How to register in Diia.City

The registration procedure in Diia.City is simple and will take about 10 minutes of your time. For convenience, online registration is provided, and detailed instructions are available on the website of the government portal Diia.

So, you need to take the following steps:

1. Register or log in (if you are already registered) on diia.gov.ua and pass the verification with an electronic signature.
2. Fill in the application form. Fill in the attached documents in Ukrainian and sign them with a qualified electronic signature.

The application can be submitted by:

• the head of the company;
• an authorised person on behalf of the company specified in the Unified State Register;
• a representative of the company by power of attorney.

3. The application will be sent to the Ministry of Digital Transformation. Expect a notification of acceptance of the application to your email.
4. Then the Ministry of Digital Transformation considers the application and attached documents within 10 working days.

Based on the results of the review, four options are possible: 

• you have not received a response from the Ministry of Digital Transformation: we have a “principle of tacit consent”, so if you have not received a response within 10 days, your company automatically receives the status of a Diia.City resident;
• The Ministry of Digital Transformation decided to return the application without consideration;
• The Ministry of Digital Transformation has decided to grant your company the Diia.City resident status;
• The Ministry of Digital Transformation has decided to refuse to grant the Diia.City resident status 

Along with the decision itself, the Ministry of Digital Transformation also sends you a substantiated explanation by email.  All decisions of the Ministry of Digital Transformation are entered into the Diia.City register.

Conclusion: Time to action

“Diia.City” offers an innovative tax and legal regime that provides IT companies and professionals with a variety of benefits and opportunities. So if your company meets the conditions described in this article, this could be a great incentive to take further steps.