S1 REIT Supports Bill on Taxation of Income from Digital Real Estate Platforms

The investment company S1 REIT, which focuses on real estate investments, has announced its backing for a legislative bill aimed at taxing income earned through digital platforms. According to the company, this bill is expected to serve as an important instrument for formalizing the rental market in Ukraine. This information was shared by S1 REIT's press service with the Interfax-Ukraine agency.

Vadym Pavlushin, the Chief Financial Officer of S1 REIT, emphasized that real estate investment funds operating under the Real Estate Investment Trust (REIT) model function with complete tax transparency. 'We pay all taxes mandated by law on behalf of our investors. In particular, dividend income is taxed at a rate of 9% (personal income tax) and 5% (military levy). For us, this is a norm that we diligently and consistently adhere to,' he stated.

However, Pavlushin also noted that a significant portion of the real estate rental market remains in the shadows, creating uneven competitive conditions. 'Convincing people to play by the rules when there are loopholes for evasion is quite difficult. Not least, these gaps are caused by weak regulation and a lack of oversight. If the new bill creates conditions under which tax evasion becomes more challenging, it will be a positive signal for the entire market,' he added.

Pavlushin further highlighted that regulating the industry would benefit not only the state but also investors and property owners who would be able to verify their income. 'They will be able to freely manage their funds and not fear audits, as they will have official confirmation of their income sources. This has become standard practice in EU countries, and Ukraine will finally not be an exception,' he remarked.

It is worth noting that on April 8, the Verkhovna Rada of Ukraine adopted in the first reading the foundational bill No. 15111-d, which pertains to the automatic exchange of information regarding income on digital platforms. This bill serves as a structural beacon for a new financing program with the International Monetary Fund (IMF), which Ukraine was expected to fulfill back in March.

The initial version of the bill (No. 15111), submitted by the Cabinet of Ministers, proposed taxing income from rental services for real estate and vehicles, as well as personal services and sales of goods received by individuals through digital platforms. These incomes were to amount to up to 834 minimum wage levels (approximately UAH 7.2 million as of 2026), with a tax limit of €2,000 per year. The responsibilities of the tax agent were to be assigned to the operators of digital platforms.

Bill No. 15111-d is a revised version by the Verkhovna Rada's committee on finance, tax, and customs policy of the initial government document. The final text eliminated several provisions that businesses and industry experts deemed excessive.

A key change in document No. 15111-d was the introduction of a preferential tax regime for self-employed individuals. Under the new conditions, instead of a general rate of 19.5% (18% personal income tax and 1.5% military levy) for income earned through digital platforms, a rate of 5% will be applied. During the period of this special regime, such income will also be exempt from military levy. This model applies to individuals whose annual income does not exceed the limit established for the second group of single tax payers.

Additionally, the revised draft clarified the registration procedure: users of online services will not need to register as individual entrepreneurs (IE) – the status of self-employed individuals will be granted automatically upon registration on the platform and consent to share information with the tax service.

S1 REIT is an investment company specializing in professionally managed income-generating real estate. The company operates under the REIT model, allowing investors to participate in ownership and income generation from profitable properties without direct asset management. Currently, S1 REIT's portfolio includes two funds – S1 VDNH and S1 Obolon, which consist of apartments in profitable buildings developed by Standard One.