Court-ordered payments are tax-exempt within 34,588 hryvnias
The State Tax Service of Ukraine has clarified the taxation rules for moral damage compensation in 2026. Specifically, court-ordered payouts are exempt from taxes within the limit of four minimum wages, which equals 34,588 hryvnias. This is reported by the portal PromPolitInform, citing information from the State Tax Service of Ukraine.
Receiving funds as compensation for inflicted moral suffering is regulated by the provisions of the Tax Code of Ukraine. Generally, such proceeds are included in citizens’ taxable income, yet the legislation contains clearly defined exceptions.
Conditions for Tax Exemption of Court Compensations
The tax agency notes that the minimum wage in 2026 is 8,647 hryvnias. Consequently, the tax-free limit for court-ordered payments equals four minimum wages, meaning 34,588 hryvnias.
In addition, tax-exempt amounts include those directly stipulated by law, as well as state budget payouts for executing European Court of Human Rights judgments. Exceptions also cover funds used by the state to compensate for damages caused by unlawful actions of investigative bodies, prosecutors, or courts.
Taxation of Excess Amounts
If a court ruling provides for a larger payout, taxes are charged exclusively on the difference exceeding the established limit. For instance, out of a total amount of 50,000 hryvnias, 34,588 hryvnias will remain tax-free, while taxes will apply to the remaining 15,412 hryvnias.
The resulting excess amount is subject to the personal income tax at a rate of 18 percent and a military levy of 5 percent. Similar rules apply to payments that lack statutory tax exemptions or are assigned outside of court procedures.
Responsibilities of Tax Agents and Reporting
When a payment is made by a legal entity with the status of a tax agent, it is obligated to withhold and remit the necessary payments to the budget. In this case, the recipient does not need to submit an annual tax return independently.
The situation changes if the payout source is an individual or entity that is not a tax agent. In that case, the citizen must independently include such information in the annual tax return and pay the statutory levies.
Illustrative photo: State Emergency Service of Ukraine / CC BY 4.0
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