How Not to Lose Diia.City Residency Status: Advice from Global Audit
IT ClusterResidency in Diia.City offers tax benefits, flexible collaboration formats, and business protection. However, these advantages come with responsibility: over 300 companies have already lost their status, more than half due to non-compliance with the requirements.
Together with experts from Global Audit and a partner of Kharkiv IT Cluster, we’ve gathered the key insights to help businesses retain their status and avoid penalties.
1. Don’t Miss Reporting Deadlines
Each resident company must submit an annual Compliance Report and an auditor’s opinion. A delay of more than 20 business days puts the company at risk of losing its status.
According to Law No. 1667-IX, every Diia.City residents must submit three key types of reports:
2. Develop Your Methodologies for Calculating the Following Indicators
Average Monthly Remuneration for Employees and Gig Specialists (if engaged)
According to Law No. 1667-IX, the average monthly remuneration must be calculated using the cash method. This means: calculate the total amount of funds actually paid to individuals in a given month (before mandatory deductions like taxes), and divide it by the number of individuals who received those payments.
However, in its official letter dated 20.02.2023, No. 1/11-5-У-385-23-258-2023, the Ministry of Digital Transformation clarified: it is also acceptable to use the accrual method, where payments that were due but not yet made are considered.
➡️ Recommendation: In your internal methodology, clearly specify which method you are applying — cash or accrual.
What should not be included in the average remuneration?
The following payments are excluded from the remuneration calculation:
- sick leave compensation,
- childbirth-related financial assistance,
- severance payments, etc.
They are not part of the payroll fund and are not included in the calculation of the average monthly remuneration. These amounts are subject to an 18% tax.
What about gig specialists?
It is crucial to detail in the contract what exactly constitutes the remuneration. For example, whether paid breaks are included remains a grey area and should be addressed contractually.
🔹 Recommendation: Structure gig specialists’ remuneration carefully and document it thoroughly in the agreement.
Average Headcount of Employees and Gig Specialists (if engaged)
The Ministry of Digital Transformation emphasizes that this metric should follow the Instructions on employee headcount statistics. However, this document lacks guidelines for gig specialists. Still, the logic is straightforward: gig contracts fall under civil law agreements, so gig specialists can be counted similarly to other civil contractors.
There may be differing interpretations regarding whom to include or exclude: individuals under civil law contracts (CLCs), mobilized employees, those dismissed just before weekends, and others.
It’s also important to pay attention to rounding rules (see the final page of the instructions). To avoid confusion, clearly describe your chosen approach in your internal methodology, based on the applicable regulations.
Share of Qualified Income in Total Income for the Reporting Period
While there is no official calculation methodology, you must clearly distinguish between total income and qualified income.
🧾 Total income includes:
- net revenue from the sale of goods, services, or works;
- operating income such as royalties (if not already included in net revenue).
✅ Qualified income has the same structure but includes only those business activities specified in Article 5 of Law No. 1667-IX.
If a Diia.City resident operates in multiple domains, it is crucial to verify whether all of them qualify under the Law. If not, qualified income must account for at least 90% of total income to retain residency status.
3. Maintain Documentation
Your report must align with factual data. Prepare and retain supporting documents related to:
- payments made to employees and gig specialists,
- company income (total and qualified income),
- team composition changes.
4. Assign a Responsible Person
Your auditor needs a clear point of contact. Appoint a responsible individual or team to prepare and coordinate the report.
5. Choose an Auditor
The auditing firm must be authorized to conduct mandatory audits of financial statements. In other words, it must be listed in the Register of Auditors and Auditing Entities and included in Section 3 of the Register (including auditing firms that are simultaneously listed in both Sections 3 and 4). A Diia.City residents may choose any auditing firm that meets the above-mentioned criterion.
You can verify whether an audit firm is included in the appropriate register on the website of the Public Oversight Body for Audit Activities: https://register.apob.org.ua/uk/search.
Most resident companies have already recognized the advantages of working specifically with auditing firms experienced in the Diia.City ecosystem. This ensures a faster, higher-quality audit with fewer risks, as these auditors are already familiar with the legal nuances and common mistakes typical for this regulatory framework.
By the way, you can read more about the most frequent mistakes here.
Why choose Global Audit?
Global Audit is a leading audit firm and part of Global Consulting Corporation. It was the first Ukrainian firm accepted into AGN International — a global association of independent audit and consulting firms ranked among the top five worldwide.
Considering the growing number of Diia.City residents each year, and the limited number of audit firms that both comply with legal requirements and have relevant experience, it is best to start the auditor selection process before the end of the reporting year.
Interested in working with Global Audit? Contact your personal Kharkiv IT Cluster manager.
Not yet a member of Kharkiv IT Cluster? Now’s the perfect time to join — our community has access to exclusive offers: https://it-kharkiv.com/join/
