Ukrainian investors seeking to diversify their capital and invest in foreign assets (real estate, securities, business shares) face a number of serious obstacles. Classic channels for capital repatriation to jurisdictions with strict compliance (Europe, USA), where clients and the origin of their funds are meticulously verified, can unexpectedly become complicated.
Experience shows that many Ukrainians have no idea how to structure capital for future use, and the problem of cross-border payments itself can lead to account blocking.
Three key problems with Ukrainian capital abroad
Professionals focusing on solving this problem conventionally divide the complexities into three groups:
- Problems with fund transit
The methods Ukrainians are accustomed to using to withdraw money from Ukraine to Europe have either stopped working or are operating with significant limitations, forcing them to seek new ways.
- Documentation difficulties
Even if the capital is already outside of Ukraine, documents will be needed that the European Union (EU), its bodies and banks will accept to confirm the origin of funds when making investments.
- Lack of structure and origin
People often have no idea how to structure their capital (whether it's in crypto, Ukraine, or Europe) so that it can be used further for their goals, as the necessary documents are missing.
Why don't classic methods work for large sums?
1. Transporting cash across borders
Previously, you could simply declare cash at the border and deposit it into a bank account in Europe. Now, this procedure has become significantly more complicated for the following reasons:
- Fund requirements
Withdrawn funds must have proof of withdrawal from a bank account, and this transaction must be recent (not several years ago). This creates problems, as people who received funds, for example, from the sale of real estate, often do not have information about the withdrawal or did not think it would be needed.
- Compliance issues
Even if all the documents are in order, border guards sometimes deliberately create problems, trying to earn extra money from those who don't know the law. Additionally, at the border guards' request, banknotes can be stamped, but European banks dislike stamped money.
- Government restrictions
The Ukrainian state, along with banks, is trying to maximally restrict possibilities of capital outflow so that it continues to work in Ukraine.
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Payment systems (Wise, Revolut)
Payment services like Wise or Revolut can be used for small personal expenses. However, they are risky for large sums:
- Refill
There are currency restrictions: currency transfers from Ukraine are prohibited, and there is a limit for transfers in hryvnia.
- Restrictions for Ukrainians
Many payment providers are limiting functionality or completely stopping the acceptance of Ukrainian passports, requiring European residency. Revolut no longer opens accounts for Ukrainians.
- Blocking via crypto
Wise and Revolut consider crypto operations to be very high risk and block related payments. Fund freezes can last for months, and improperly submitted documents can lead to a complete freeze.
Cryptocurrency as the most reliable way of transit
There are no more reliable ways than cryptocurrency today. Crypto is a popular option for storing and transiting funds because it is liquid and can always be exchanged back for fiat (dollars, euros, hryvnias).
The company Xpaid, licensed in Lithuania, offers a comprehensive solution that transforms crypto-transit into a legal financial transaction.
Step-by-step guide to legalizing capital through crypto
- Source of fundsSource of Funds)
This is the most important first step. Documents are needed that explain where the money came from: FOP declaration, salary certificate, real estate sale declaration. The company does not create a document of origin, but only uses an existing one. Even a recently sold apartment is suitable if there is a contract.
- Buying crypto in Ukraine
Since Ukraine does not regulate crypto, no institution can provide legal confirmation of its purchase (contract, invoice). The easiest way is to buy crypto for cash at an exchange office. A European company can accept crypto from an unregulated jurisdiction, requiring only informal confirmation (screenshot of correspondence, loan or gift agreement, or proof of mining/trading).
- Official Exchange (KYC and AML)
The client undergoes verification (KYC – who they are, where they reside). Funds are screened for purity to ensure it's not «dirty» crypto withdrawn from mixers. After verification, an exchange agreement is signed, and a crypto invoice is issued. Xpaid company legally exchanges crypto for euros, holding the necessary license.
- Transfer to Friendly account
Received euros are credited to an account in a payment system that:
- Friendly to Ukrainian passports;
- Crypto-friendly, as it has included work with crypto companies in its policy.
- Pre-approved by the xpate compliance team and payment institution.
This approach ensures that the payment will not be blocked. To date, no pre-approved transactions have been blocked.
Taxes and Reporting (CRS)
The issue of taxes is separate from issues of origin and transit.
- Taxation of exchange
If crypto is used only as a transit instrument (bought USDP for €100k, sold for €100k), no tax is charged because there is no income. Tax only needs to be paid on profit (if you put in €50k and took out €100k).
- CRS and information exchange
Xpaid, a company registered in the Baltics (Lithuania), only provides data to the Lithuanian regulator on transactions exceeding 15,000 euros. No data is automatically transferred to the Ukrainian tax authorities. Information exchange can only occur upon a specific request from the Ukrainian tax authorities to the Lithuanian regulator.
- Tax residency risks
If the client is a tax resident of another country (e.g., Spain), that country may require payment of taxes on certain transactions. Therefore, it is crucial to structure all tax issues before investing.
Choosing financial partners and security
The payment institutions that Xpaid works with are considered transit points, and the company does not recommend keeping large capital in them on a permanent basis; it is better to transfer it to traditional banks.
The company carefully evaluates the payment systems it works with based on the following criteria:
- Original work
Opening operational/trading accounts and going through the customer journey in person.
- Compliance analysis
Studying the payment service's operational policies, analyzing their documentation, and communicating with the regulator. The quality of the written documents indicates the professionalism of the team.
- Personal contact
Mandatory introduction to the management team or owners. This helps to assess the capabilities of individuals to handle potential issues.
Target audience
The main client need (around 80%) is purchasing real estate. The most popular destinations are Spain and Poland. Other use cases include:
- Capitalization of authorized capital (company formation);
- Luxury goods purchase (automobiles);
- Investing (buying securities, diversifying capital).
In this complex field of investing, it's advisable to first take the time to learn about the topic before transferring funds or purchasing services. This will help avoid legal nuances that can arise even years after the transaction itself.
