Luxury goods taxation: which items will be taxed, how it will help the budget, new regulations.

Luxury goods taxation is one of the modern tools of tax policy, used by many countries to balance budgets, fight social inequality, limit non-priority imports, and finance public needs. In Ukraine, the issue of luxury goods taxation became relevant in 2025 amid a record state budget deficit caused by defense spending and postwar economic recovery.

Defining luxury goods and taxation approaches

Luxury goods—depending on the country—are considered as products or assets not essential for basic living needs. This category usually includes:

• jewelry,
• premium motor vehicles,
• yachts, private jets,
• works of art,
• expensive watches,
• premium real estate,
• fashion brands, designer clothing,
• collectible wines, valuables, and antiques.

In practice, luxury taxation deploys such methods as:

• a special excise (tax) added to the item’s value,
• increased VAT rate or a separate “luxury tax,”
• local import duties on product categories,
• wealth/property taxes.

International experience

France, Italy, Sweden, and Norway have long applied special excises for luxury goods — these rates often exceed the base rates. Some US states apply a luxury tax to purchases above a set amount. In the UK, not just the purchase, but the possession of luxury assets (such as “supercar” autos or elite mansions) is taxed.

Legislation and current Ukrainian practice

In Ukraine, expanding luxury goods taxation arose from NBU recommendations to use fiscal maneuver without harming defense and social spending. In October 2025, the National Bank proposed taxes on:

• international postal parcels up to €150,
• electric vehicles,
• luxury goods (specific items to be defined).

Legislative proposals anticipate new excises or higher VAT, as well as stricter import controls on non-priority goods. These steps aim to generate extra budget revenue and stabilize the balance of payments, since capital outflow abroad during wartime threatens macrofinancial stability.

Main arguments for luxury taxation

Equitable tax burden between affluent and low-income groups,

Building a resource base for public spending,

Stimulating domestic demand (shifting consumption to less expensive or Ukrainian-made goods),

Protecting domestic producers amidst import restrictions,

Reducing social tensions and supporting tax justice.

Criticism and risks

Main objections include:

potential capital flight and “shadow” or overseas luxury purchases,

increased indirect costs for the middle class (since many buy “luxury” items like electronics or branded clothes for daily life),

administrative complexity: defining the luxury list, avoiding double taxation,

risk of “splitting” (structuring) imports to evade the tax, especially for parcels and e-commerce.

List of possible taxable objects

Matching global trends, Ukraine may tax:

• yachts, private jets, premium cars, electric vehicles (on purchase and registration),
• premium real estate (not the primary residence or over 200 m²),
• expensive watches, jewelry, antiques, art,
• designer clothes and exclusive accessories,
• hotels, clubs, and “elite” segment restaurants.

Types of luxury tax and international logistics

For example, such a tax may apply to international postal/courier parcels (even small ones) above a set limit (proposed at €150). Excise or VAT may become obligatory for electric vehicle sales—previously exempt under ecological policy (this rule is under debate in 2025).

Potential tax rates

In the EU, luxury taxes range from 10% to 25% (up to 30% in France, 10% in the US, 25% in Sweden). Ukraine’s rate is still under review, but proposals include an extra excise + a higher VAT (e.g., 10–15% excise, VAT up to 25%). An alternative is a flat fee on registration for premium property or transport.

Administration, control, customs clearance

State agencies and customs must receive extra control and registration tools. Solutions include electronic declaration, automatic “catalog” valuation, and luxury labeling upon import. There’s focus on combating avoidance schemes, cross-border structuring, and “splitting” parcels or offshore purchases.

Prospects for Ukraine’s luxury tax system

By 2026, luxury goods taxation will become a tax policy priority for postwar reconstruction and budget stability. NBU, government experts, and international consultants consider this model a budget reserve for macrofinancial stability—without imposing new pressure on vulnerable social groups.

Conclusion

Luxury goods taxation is a flexible fiscal tool adaptable to a wartime economy, budget reform, and public need. A balanced approach minimizes risks, leverages control and fairness, and can significantly expand the country’s budget in crisis.

Author: Ihor Yasko, Managing Partner at WINNER Law Firm, Ph.D.
With this dynamic, professional support and legal expertise from WINNER Law Firm enable thorough tax risk analysis, asset structuring, and prevent unnecessary losses—a comprehensive approach grounded in international and Ukrainian practice will help business and citizens rationally respond to new “luxury tax” realities.