Diia.City is a legal regime unique to Ukrainian legislation, introduced for IT companies in 2021. The regime was the state's response to the market's need for flexible regulation of IT relations and created a set of tools advantageous to companies: from gig contracts to preferential taxation.
Since its launch to date, the regime has proven its practical value and interest in the Ukrainian IT sector. As of June 2026, more than 5,000 residents are already registered in Diia.City. This has contributed to the official transition of IT businesses out of the shadows, the improvement of tax conditions for companies, and the guarantee of labor rights for IT company employees.
Residency criteria
A legal entity registered in Ukraine, regardless of its location, that meets all of the following requirements can become a Diia.City resident:
- Performance of one or more qualified activities (defined in Part 4 of Article 5 of Law No. 1667) with their indication in the USR
- The average monthly remuneration for employees and gig specialists is at least 1,200 euros (at the NBU exchange rate on the 1st of the month).
- The average headcount of employees and gig specialists is at least 9 people
- Share of qualified income – at least 90% of total income
*Startups are exempt from the requirements set forth in clauses 2 and 3 during the grace period – by the end of the next year following the year of obtaining the Diia.City resident status.
Registration procedure
The procedure for acquiring status is carried out through the Diia portal and includes the following main stages:
- Analysis of the charter and NACE codes: checking the compliance of activities with the list of qualified ones, if necessary – making changes to registration documents
- Personnel audit: confirmation of compliance of the number of employees and salary levels with residency criteria
- Preparation and submission of the application via the Diia portal
- Choosing a taxation system: special (tax on distributed profit) or general
- After registration – preparation of the initial compliance report (submitted within 6 months; covers the first 3 months starting from the month following the acquisition of status)
Special employment conditions
Diia.City residents have the right to choose one of three models for formalizing relations with IT specialists, and each of them has a different legal regime:
A gig contract is a completely new tool for formalizing cooperation with IT company specialists, combining elements of employment and civil law contracts. Since the norms of the Labor Code do not apply to it, the terms of cooperation are determined entirely by the contract itself. That is why the content of the gig contract and the quality of its preparation are critically important.
Key features of a gig contract to consider when drafting the agreement:
- Termination procedure: the employer must notify the gig specialist 30 days in advance (or pay compensation in lieu of this notice period)
- Labor guarantees different from those established by the Labor Code: vacations, sick leave, severance pay
- Intellectual property issues: economic rights are defined by law, but can be modified in a contract
- Confidentiality and NDA: the terms of trade secret protection require separate regulation
- Non-compete clauses: subject to separate agreements.
Potential risks when working with gig contracts
- Lack of Labor Code protection: the specialist does not have labor rights automatically provided by law – only those stipulated in the contract
- Tying to resident status: loss of status = automatic termination of all gig contracts
- IP issue: without clear regulation in the contract, rights to created products may be disputed
- Liability without the Labour Code: disciplinary liability is also regulated solely by the contract.
Taxation
One of the key incentives of the regime is preferential taxation. A Diia.City resident company has the right to choose one of two taxation systems:
- Special conditions – tax on distributed profits, rate 9%. It is paid not from profit, but from specific operations considered to be capital withdrawal: dividends, royalties, interest, commissions, compensations, fines, penalties for raising funds, etc., regardless of whether the company is profitable. If profit is reinvested in the business rather than withdrawn, the tax is effectively not paid (0%), making this model particularly advantageous for rapidly growing companies that do not distribute dividends.
- General system – corporate profit tax, 18% rate from the financial result (income minus expenses); in the event of a loss, the tax is zero.
Depending on the work format, the following rates apply to employees/specialists:
Compliance and reporting
Until February 2024, Diia.City residents were exempt from the requirement to submit of the conformity assessment report and/or independent report. Currently, residents are again required to:
- Submit the initial compliance report within 6 months of acquiring status (covering the first 3 months)
- Submit an annual report on compliance with residency criteria
- Undergoing an audit and obtaining an independent auditor's report is a mandatory condition for confirming the report
*When submitting the initial report, startups are exempt from submitting an independent opinion.
Loss of status
Resident status is lost in the event of non-compliance with the criteria identified as a result of reporting or an audit, or by voluntary renunciation. The return of reporting requirements has led to an increase in the number of companies that have lost their status.
Importantly! Consequences of losing status:
- Automatic termination of all active gig contracts
- Switching to the general taxation regime and legal uncertainty regarding the transition period in case of non-compliance detection
- The need to reformat relationships with specialists into a different structure
Criticality and reservation of employees
(latest amendments according to CMU Resolution No. 692 dated 05.30.2026)
One of the key incentives for obtaining Diia.City resident status under martial law is the possibility of booking (deferring from mobilization) employees.
In fact, previously for Diia.City residents to obtain the status of a critically important enterprise, it was sufficient to have no tax and single social contribution arrears. Companies met the salary threshold automatically to maintain their Diia.City resident status (minimum €1,200), and the third criterion was the resident status itself.
From June 2026, the criticality requirements have changed significantly, including for Diia.City residents.
The new rules require confirmation of an average monthly remuneration of at least the equivalent of 1,200 euros over the last six full calendar months. In addition, confirmation is based solely on tax calculations, rather than on the company's internal documents.
For startups, an additional criterion is generating revenue equivalent to 20,000 euros, which must be confirmed:
- initial report or
- annual report submitted together with the audit opinion.
Thus, new Diia.City residents will physically be able to obtain the status of a critically important enterprise only half a year after acquiring residency.
Conclusions and recommendations
Diia.City has formed a unique legal ecosystem for IT business in Ukraine, which has no analogues in domestic law. The continuous growth in the number of residents confirms the practical value of the regime, and the coverage of 70–80% of the IT sector demonstrates its status as the dominant model for the industry.
Legal support for residents is comprehensive and dynamic. It is not limited to one-time registration, but includes ongoing compliance monitoring, labor law support, audit assistance, and adaptation to regulatory changes, which are especially relevant under martial law.
What should you pay attention to?
Restoration of compliance requirements after wartime relaxations
The cancellation of wartime exemptions has become a significant challenge for the market. Companies that obtained resident status in 2022–2023 under the lenient regime must now comply with full requirements regarding the number of specialists, salary levels, and reporting preparation.
Legal uncertainty upon loss of status
Voluntary renunciation of resident status and voluntary switching between taxation systems are regulated by law, whereas the situation of involuntary loss of status due to non-compliance with criteria is not clearly regulated. Taxation in such a transition situation remains a subject of legal debate and a risk that requires legal elaboration.
Mobilization pressure and reservation
Under martial law, the issue of booking IT specialists has become critically important. Legal support in terms of obtaining and maintaining the status of a critically important enterprise, preparing documents for booking, and adapting to constant changes in the regulatory framework (such as Resolution No. 692) has become critically important for Diia.City residents.
Key recommendations for resident companies:
- Ensure ongoing legal monitoring of compliance with residency criteria (especially regarding salaries and the number of specialists)
- Conduct timely audits and prepare reports in accordance with the requirements of Resolution No. 163
- Carefully review gig contracts (IP clauses, confidentiality, termination terms, warranties)
- Track changes in the regulatory framework regarding reservation and mobilization issues
- In case of the risk of losing status, immediately involve legal consultants to minimize the consequences
- Choose the appropriate taxation system based on individual analysis rather than template solutions
How Bargen can help your company at every stage of working with Diia.City
- Obtaining residency. We will check if your NACE codes and statutory documents meet the Diia.City criteria, prepare and submit the application, and suggest the optimal taxation system to ensure the registration goes through without delays or rejections.
- Team and contracts. We will develop gig contracts tailored to your specific needs, review current agreements, help you choose the safest cooperation model with specialists (gig, Labour Code, or sole proprietorship), and draft reliable terms regarding confidentiality and intellectual property rights.
- Status safety. We will monitor your compliance with residency criteria, coordinate the audit, and proactively warn you of any risks of losing your status—on a subscription basis or as a one-time service.
- Booking. We will help you obtain the status of a critically important enterprise and keep you updated on all changes regarding reservation limits and mobilization legislation.
Frequently Asked Questions about Diia.City (FAQ)
Who can become a resident of Diia.City?
A legal entity registered in Ukraine can become a Diia.City resident if it carries out one or more qualified IT activities, meets the requirements regarding the average remuneration of specialists and the number of employees or gig specialists, and also ensures a share of qualified income of at least 90%.
What benefits does a company receive after obtaining Diia.City resident status?
Diia.City resident status provides access to a special tax regime, the ability to use gig contracts, choose the taxation system, and also simplifies the attraction of IT professionals. In addition, provided that legislative requirements are met, the company can apply for the status of a critically important enterprise for employee reservation.
What is a gig contract and how does it differ from an employment agreement?
A gig contract is a special form of agreement available exclusively to Diia.City residents. Unlike a classic employment agreement, it is not regulated by the Labor Code, and its terms are determined by the parties within the contract itself. That is why special attention should be paid to provisions regarding intellectual property, confidentiality, the procedure for terminating cooperation, and other essential terms.
What happens if a company loses its Diia.City resident status?
In the event of losing resident status, the company switches to the general taxation regime, and all active gig contracts are terminated. There is also a need to re-execute relationships with specialists and assess tax and legal consequences, which may depend on specific circumstances.
What changes regarding employee reservation were introduced for Diia.City residents in June 2026?
Starting in June 2026, the rules for obtaining the status of a critically important enterprise for Diia.City residents became stricter. While previously meeting the Diia.City residency requirements was essentially sufficient to confirm the salary criterion, companies must now confirm an average monthly remuneration for employees of at least the equivalent of EUR 1,200 for the last six full calendar months. Such confirmation is made on the basis of tax reporting rather than the company's internal documents. As a result, newly established Diia.City residents will be able to apply for the status of a critically important enterprise only after six months of operation under the Diia.City regime.
Why should a company involve legal support when working with Diia.City?
Legal support helps not only to obtain resident status, but also to maintain compliance with legal requirements. It includes the analysis of compliance with residency criteria, the preparation of gig contracts, support for reporting and auditing, monitoring of legislative changes, and the minimization of the risks of losing resident status.
This article is for informational purposes only and does not constitute legal advice. The information provided reflects the state of legislation at the time of publication and may be outdated due to dynamic changes in the regulatory framework. To assess the specific circumstances of your enterprise, please seek personalized legal advice.
