What is a government bond?
Investing in domestic government bonds is the placement of money at interest, but not on deposit, but in government securities, under government guarantees with a fixed interest rate. They are placed exclusively on the domestic market of Ukraine and are a confirmation of obligations to pay the debt. The debtor in this case is the state of Ukraine, which pays interest within the agreed period according to the terms of the bonds and their nominal value. Bonds are worth paying attention to, because they have many advantages and attractive differences.
What are the bonds
Government bonds are debt securities that have an undocumented form of issue, so they exist only in electronic form. The Ministry of Finance of Ukraine issues such bonds.
Government bonds can be issued in UAH, EUR or USD. They are paid in the currency in which they are issued. The face value of one bond is UAH 1,000 / USD 1,000 / EUR 1,000. Changes in the currency legislation from February 7, 2019 allow individuals to buy government bonds in both UAH and foreign currency (but only through traders, are banks).
Government bonds can be interest (expected payment of interest income (coupons) within a specified period of time) or discount (placed at a price below face value, income consists of the difference between the face value and the purchase price).
Income from government bonds
Income from government bonds is not only interest, but also investment income, ie the difference between the cost of selling and buying securities.
Interest income from bonds, depending on the maturity of the security is:
Income from all government bond transactions received by individuals is not subject to personal income tax (PIT) and is not subject to military duty. At the same time if you put money on deposit, then personal income tax of 18% and military duty of 1.5% will be deducted from the income of an individual.
Therefore, government bonds today are a very attractive tool for investing in the stock market and an alternative to classic deposits. But before you start investing, you need to read the rules.
Tariffs for purchase and sale of securities
on organized capital markets - 0.05% of the contract amount
outside organized capital markets - 0.1% of the contract amount
for legal entities:
from UAH 1,000.00 to UAH 9,999,999.99 - 0.04% of the contract amount
from UAH 10,000,000.00 to UAH 20,000,000.00 - 0.03% of the contract amount
UAH 20,000,001.00 and more - 0.02% of the contract amount
The tariff for the provision of investment services for government bond transactions does not include other client expenses for securities purchase and sale transactions, in particular, services of a depository institution, notary, key certification center, post office, bank settlement and cash services, taxes and fees from purchase. sale of securities.
Who can buy government bonds
Any individual or legal entity can buy government bonds. It is enough for this:
Bonds may be of interest to those who are willing to invest funds for UAH 50,000, as in transactions with bonds will be additional fees and expenses.
Benefits for government bondholders
How to file a tax return on investing in government bonds
Since bonds are a security, individuals must file a tax return when conducting transactions with them, namely Appendix F1.
It is quite easy to file a tax return on your own in the electronic office on the website https://cabinet.sfs.gov.ua. You need to make a request in the system to obtain information about the income collected and paid for you by tax agents from individuals from the form №1-DF. The system will then automatically upload the data to the tax return. Then this data must be verified, signed and sent to the State Tax Inspectorate through an electronic cabinet.
In order to sign the declaration, as well as enter the system, you will need an electronic digital key - this can be done in a few minutes through the Privat24 system with a Privatbank card.
Do you want to buy domestic government bonds or have questions? Contact us!