What is Diia City and Why Was It created?
Diia City is a special regime introduced for the Ukrainian IT industry on February 8, 2022, offering specific benefits and approaches for companies in this sector. It was created to promote the development of the digital economy in Ukraine.
This regime provides preferential taxation for companies and opens up the possibility of gig contracts for employees, which attracts many professionals in the IT field. An important feature of Diia City is that only Ukrainian companies that meet specified criteria can voluntarily become its residents, after which they can claim tax benefits.
Recently, there has been a trend where entrepreneurs in the information technology sector, who already have an existing foreign company, decide to also register a company in Diia City. This allows them to obtain certain benefits, such as simplified taxation and reduced tax rates.
Moreover, registration in Diia City allows them to legally enter the Ukrainian IT market and gain access to its advantages and opportunities.
Who Can Register in Diia City?
Only Ukrainian companies, regardless of the place of business activity, can become residents of Diia City. To obtain resident status, a company must meet the following criteria:
- Engage in one or more types of activities defined in the Law of Ukraine "On Stimulating the Development of the Digital Economy in Ukraine." These activities include computer programming, video game creation, software creation and sales, computer-related training, research and development of new technologies, marketing and advertising through programs, video game organization, virtual asset exchange, and information network security, among others.
- Ensure that 90% of the company's total income for the first three calendar months following the month of obtaining resident status is qualified income. Additionally, 90% of the total income for each calendar year of residency must be qualified income.
- Have an average monthly salary for employees and gig specialists of at least 1200 euros.
- Have an average number of employees and gig specialists of at least 9 people.
How Can We Help?
Of course, the specifics of registering a company in Diia City can be complex, so Campio Group specialists are ready to provide full support and assistance at every stage of this process.
Feel free to contact us with any questions or requests regarding registration in Diia City. Our team is ready to help make this process simple and efficient.
What Advantages Does Diia City Residency Offer?
Diia City residency provides several significant benefits for companies operating in the IT sector in Ukraine, including:
- Tax Benefits: Resident companies can take advantage of reduced tax rates. For example, the personal income tax is 5% instead of the standard 18%. Additionally, for gig contracts, the rate is 5% plus 1.5% for the military levy.
- Capital Retention Incentives: A Diia City resident can choose how to pay corporate tax: 9% on withdrawn capital or 18% on profit on a general basis.
- Benefits for Individuals: Individuals who receive dividends from Diia City resident companies also enjoy tax benefits, such as complete exemption from taxation.
- Protection from Excessive Audits: Resident companies receive special guarantees against unjustified audits and other negative business interferences.
- Mobilization Deferment: Residents have the right to defer mobilization by reserving their regular employees.
- Long-Term Benefits: All provided benefits and advantages for Diia City residents are valid for 25 years.
Overall, Diia City residency opens up extensive opportunities for IT companies, allowing them to operate efficiently, grow, and compete in the international market.
