Cash on Delivery for Online Stores: Payments, Documents, Taxes, and Returns

Cash on delivery (COD), also known as payment on delivery, lets buyers pay for goods when they receive a shipment. Sellers should agree on the price and any additional charges in advance, set out how documents will be prepared, and reconcile every order against the funds transferred. Whether a fiscal cash register (RRO) or a software fiscal cash register (PRRO) is required depends on the actual sales and payment arrangement and the contracts with the parties involved in delivery.

For a full COD payment through Nova Poshta and NovaPay, with no advance payment and the seller receiving funds cashlessly into a business current account, the Supreme Court found that the seller had not conducted a settlement transaction under the circumstances established in that case. To apply this conclusion to your business, check that all the conditions match, retain the contracts and payment documents, and provide the buyer with documents for the goods. This article covers sales in Ukraine under Ukrainian law, including sales by individual entrepreneurs (FOPs).

How COD works and who receives the money

In a sale with delivery, the participants are the seller, the buyer, the delivery operator and, depending on the service selected, a separate payment service provider. The seller prepares the order and is responsible to the buyer for the goods. The delivery operator transports the shipment and hands it over under the service terms. The payment service provider accepts funds to transfer them to the seller.

In an arrangement involving Nova Poshta and NovaPay, these roles must be kept separate: Nova Poshta arranges delivery, while NovaPay provides the payment service. Even when the buyer collects and pays for a parcel at the same branch, transportation, sale of the goods and transfer of funds remain separate transactions. These relationships are described in the Supreme Court judgment in case No. 520/27700/25.

A practical workflow for a store is:

1. The manager confirms the order contents, recipient, address, goods prices, and who pays for delivery and the transfer fee.
2. An employee prepares the goods documents and the waybill. For reconciliation, they link the order number to the consignment note number (TTN).
3. The buyer is given an opportunity to inspect the goods within the selected delivery service’s terms and decides whether to accept them.
4. If the buyer accepts the order, they pay for the goods and any applicable additional charges to the relevant service providers.
5. The seller checks the transfer against the payment institution’s report and the seller’s account statement.

An invoice states the amount due and payment details, but does not by itself initiate a COD transfer. To receive the money, the relevant service must be activated, the shipment must be prepared correctly, and the seller’s details must be accurate.

How to tell the buyer the full order cost

The buyer should understand three separate amounts: the price of the goods, the delivery charge, and the fee for transferring the money. Tell the buyer in advance who pays each amount. If the exact delivery charge depends on weight, dimensions or address, explain how it is calculated and confirm the amount after the shipment is booked.

This follows from the seller’s duty to provide information about price, delivery and payment terms under Article 13 of the Law of Ukraine “On Consumer Protection” No. 1023-XII and Article 7 of the Law of Ukraine “On Electronic Commerce.” The terms of a distance sale must be confirmed in writing or by electronic message. The seller cannot change terms recorded in this way unilaterally.

Practical confirmation template: “We confirm order No. __: item __, quantity __, goods price __ UAH. Payment for goods is due upon receipt through __. Delivery is paid by __; the delivery charge is __ UAH or is determined by these parameters: __. The transfer fee is paid by __ and is determined under the terms of __. Recipient and branch: __. Inspection, refusal and return procedure: __”.

Check rates and timelines with the service provider under the specific contract. For example, the official page on crediting COD payments to an account sets different terms depending on the recipient’s account and states that funds may be credited the same day or the next business day. Do not promise the buyer or supplier a universal timeline for the store to receive funds.

How to determine whether the seller needs an RRO for COD

First, check the actual transaction

Article 2 of Law of Ukraine No. 265/95-VR defines a settlement transaction, while paragraphs 1 and 2 of Article 3 set out the duties to conduct it and provide a settlement document. To decide whether to use an RRO, determine exactly who accepts the buyer’s payment, on what basis, and how the seller receives the money. Calling a service “cash on delivery” does not answer that question.

Collect the delivery contract, money transfer contract, website sales terms and examples of documents issued to buyers. Separately flag orders involving an advance payment, online acquiring or another payment method. They require their own assessment even if the buyer pays the remaining amount on receipt.

What the Supreme Court ruled on full COD through NovaPay

In case No. 520/27700/25, the Supreme Court considered a distance sale delivered by Nova Poshta and paid for through NovaPay. The following circumstances were decisive:

• the buyer made no advance payment, even in part;
• the buyer paid the full price of the goods upon receipt;
• a payment institution accepted the funds and transferred them to the seller;
• the seller received payment cashlessly and directly into its business current account;
• delivery and transfer were carried out under the relevant contracts.

Taking these circumstances together, the court found that the seller had not conducted a settlement transaction and was not required to use an RRO for the disputed receipts. The court distinguished this arrangement from distance acquiring with an advance payment. This conclusion cannot automatically be applied to advance payments, money accepted by the seller, receipts to a personal card or other contractual arrangements.

At the same time, the case concerned a fine for failing to conduct a settlement transaction through an RRO. The Supreme Court expressly stated that issuing a document to the buyer and whether its form and content complied with requirements fell outside the scope of the case. The judgment therefore does not remove the need to document the sale and transfer of goods.

How to take tax service guidance into account

In an earlier published clarification from the State Tax Service of Ukraine (DPS), the distinction depended on the contract terms. If an independent freight forwarder neither sells the goods nor accepts COD in its own name, and a separate financial intermediary transfers the funds, the DPS required the seller to issue a fiscal receipt for the goods before dispatch. Under this position, the intermediary’s later transfer does not require a second receipt from the seller.

For a different arrangement, where a courier accepts COD in its own name and issues a settlement document when handing over the goods, the DPS allowed the seller not to use its own RRO, provided the seller issued documents for the goods. The contract must substantiate this arrangement; the mere involvement of a courier does not establish it.

The Supreme Court’s conclusion on full COD through Nova Poshta and NovaPay should also be considered alongside this guidance. In practice, the seller should describe their own sales process in writing and check whether it matches the circumstances in the court case. An International Bank Account Number (IBAN) alone does not create a general exemption from RRO requirements, just as NovaPay’s involvement does not mean that the seller must fiscalize every COD payment.

If the actual transaction requires fiscalization, arrange to create and provide the receipt at the required time, and check that it covers the full transaction amount. The exemption in paragraph 14 of Article 9 of Law No. 265/95-VR applies to specified payments for services; it is not a general exemption for sales of goods.

What documents to prepare for the buyer and your records

Each document confirms a different part of the transaction. The TTN identifies the shipment. A goods document lists the seller and the items purchased. A NovaPay document confirms acceptance of funds for transfer. The business account statement confirms the funds received by the seller.

If the seller is required to issue a fiscal receipt for the goods, a payment institution’s transfer receipt does not replace it. For a full COD arrangement that matches the Supreme Court’s conclusion that the seller has not conducted a settlement transaction, provide the buyer with an appropriate goods document, such as a sales receipt or delivery note, and warranty documents where required. Under Part 11 of Article 8 of the Law of Ukraine “On Consumer Protection,” the seller must issue a settlement document or create an electronic one in the prescribed form, showing the sale date, no later than when the goods are handed over.

Decide in advance which document meets the legal requirements for your sale and how the buyer will receive it. Check separately for special document requirements applying to particular product categories.

It is practical to keep the following records for each order:

• confirmation of the order contents and agreed terms;
• a goods document with the date, seller’s name, and the items, quantities and prices;
• the TTN number and delivery, refusal or return details;
• the accepted payment report and a document showing any fee withheld;
• the account statement and, where needed, fiscal documents;
• the buyer’s request, goods return documents and confirmation of the refund.

Under Part 11 of Article 11 of the Law of Ukraine “On Electronic Commerce,” the buyer must receive confirmation of the transaction when it is made or when the seller fulfils the obligation to transfer the goods. The confirmation must include exchange and return terms, the seller’s name and location, how complaints are handled, warranty obligations and information about related services; for a contract with no specified term, it must also explain how the contract can be terminated.

Part 3 of Article 13 requires the person who received payment to provide the buyer with a document confirming receipt of funds and stating the payment date. For tax accounting, paragraph 44.1 of the Tax Code of Ukraine requires documentary support for reported figures. Keep documents for the periods set out in paragraphs 44.3–44.4, taking account of any extensions and ongoing audits or disputes.

How to reconcile COD payments and determine income

Unified tax: sale amount, fee and date of receipt

For individual entrepreneurs who are unified tax payers in groups 1–3, the basic rule is in paragraph 292.1 of the Tax Code of Ukraine: income is revenue received in the forms specified by law. Under paragraph 292.6, the date of receipt of monetary income is the date the taxpayer receives the funds. Start with these provisions when assessing a particular payment.

In its judgment in case No. 520/27700/25, the Supreme Court cited letter No. 11220-02-2/93 from the Ministry of Finance of Ukraine regarding sales through NovaPay: when the buyer pays upon receipt and a non-bank payment service provider transfers the money to the seller, the unified tax payer’s income date is the date the funds are credited to their account. Therefore, under this arrangement, keep the buyer’s payment date and the seller’s receipt date separately. For another method of receiving funds, determine the date based on its actual terms.

If a fee payable by the seller is withheld from payment for goods, record the full revenue, subject to the exceptions established by law. The fee is a store expense and does not give a unified tax payer the right to arbitrarily reduce income to the net amount received. Value added tax (VAT) amounts are excluded under subparagraph 1 of paragraph 292.11. The rule in paragraph 292.4 on income equal to remuneration applies to the relevant intermediary contracts and does not change how revenue from sales of the seller’s own goods is classified.

A buyer’s payment for a separate transport or transfer service, paid directly to the relevant provider, does not become store revenue merely because it relates to the order. If the store itself receives money from the buyer for delivery, assess it under the actual contracts and documents.

Illustrative reconciliation example. The store sells ordinary goods, is not VAT-registered, and a fee payable by the store is withheld from its revenue. All order numbers, dates and amounts in the table are invented; the fees are not an operator’s rates.

If a single transfer of UAH 3,454 is credited to the account, break it down using the report: 1,974 + 1,480 = UAH 3,454. Gross revenue is 3,454 + 46 = UAH 3,500. The report entries and bank statement confirm the same sales, so they should not be added again as separate income.

Check three types of exceptions daily: goods delivered but the transfer has not arrived; a transfer received but the order is unidentified; or the goods amounts, fees and credit do not match. Assign an employee to each discrepancy and retain an explanation and the document used to resolve it.

General tax system and VAT: when a separate calculation is needed

For an individual entrepreneur under the general tax system, paragraph 177.2 of the Tax Code of Ukraine sets out net taxable income: total taxable income is reduced by documented expenses related to business activity. Costs for goods, transportation and related services are assessed under paragraph 177.4. Credit of the net amount after a fee has been withheld is not enough to substantiate expenses; appropriate documents are required.

If the seller is VAT-registered and the general rule in paragraph 187.1 applies to the supply, tax liabilities arise on the first event: payment or shipment. For full COD, shipment may occur before the money is received. The accountant determines this date separately from the income date for a unified tax payer and from whether an RRO settlement transaction has taken place.

What to do if the buyer refuses a parcel or returns goods

The buyer did not accept or pay for the order

For full COD with no advance payment under the arrangement considered by the Supreme Court, shipping the goods did not give the seller the right to demand that the recipient collect and pay for them. The court also rejected the possibility of claiming compensation solely because a person did not collect such a shipment. Do not impose automatic penalties just because a parcel was not collected.

After receiving notice of a refusal, the manager should record the reason, arrange return of the shipment and check the delivery charges under the contract. Once the goods arrive back, an employee inspects them, confirms the quantity and condition, and returns saleable items to available stock. Record transportation and return costs separately. These costs are a risk the store must budget for under its own terms; do not assume delivery is charged the same way in every case.

The buyer notified the seller of termination of a distance contract

Consumer sales are governed by Law No. 1023-XII. Under Part 4 of Article 13, the buyer has the right to notify the seller of termination of a distance contract within 14 days of confirmation of the information or receipt of the goods, in accordance with that provision. Returning a tangible item also indicates termination. If the information was not properly confirmed, the period may be 90 days; once the confirmation is corrected, the statutory 14-day period applies.

Part 5 of Article 13 sets out cases where a buyer has no right to terminate a distance contract on this basis, unless the contract itself grants that right. Before refusing a buyer’s request, also check the store’s agreed terms. For a retail store, it is particularly important to check goods made or modified to order if they cannot be resold to others or resale would cause substantial financial loss, as well as unsealed media containing software or audio or video recordings. Apply an exception only under its legal conditions; a store label saying “made to order” is not enough.

Part 7 of Article 13 applies Parts 5–9 of Article 12 to distance contracts. In particular, the seller bears the costs associated with returning products when such a contract is terminated. The buyer must keep the product in an unchanged condition. Destruction, damage or deterioration through no fault of the buyer, as well as a reduction in value resulting from opening the packaging, inspection or testing, does not deprive the buyer of the right to terminate the contract.

The buyer tells the seller where the product can be collected; the contract may provide for its return by post. Under Part 5 of Article 12, the buyer’s duty to keep the product ends 60 days after receipt. If the seller takes no steps to collect it within that period, the product becomes the buyer’s property without an obligation to pay for it. If the buyer has no document or confirmation of the information, Part 6 of Article 12 requires a refund and reimbursement of expenses within 30 days after the seller receives the buyer’s notice that the contract is invalid.

Under Part 9, the penalty for late payment of a refund is 1% of the product’s value for each day of delay.

A short procedure for managers is useful: register the notice, check the grounds and deadline, provide a return address and method, and confirm the refund amount and date in writing. Do not apply one deadline and one ground to every request without checking the type of contract.

The buyer asks to exchange conforming goods or reports a defect

Article 9 of Law No. 1023-XII provides for the exchange of non-food goods of proper quality within 14 days, excluding the day of purchase, unless the seller has announced a longer period. The goods must be unused, with their appearance, properties, seals, labels and proof of purchase preserved. If an equivalent item is unavailable, the buyer may, among other options, terminate the contract and receive a refund. The money is returned on the day of termination or, by agreement, no later than seven days later.

For this ground, check the list of goods of proper quality in Appendix 3 to Cabinet of Ministers of Ukraine Resolution No. 172. It includes, among other things, underwear, perfumery and cosmetic products, and other specified categories. Exchange under Article 9 and termination of a distance contract under Article 13 must be assessed separately.

If the buyer reports a defect, apply Article 8. If a defect is found during the warranty period, the buyer may demand a proportional price reduction, free repair or reimbursement of the cost of remedying the defect. For non-food goods, the law provides for replacement or termination of the contract if, during the warranty period, the goods are found to have a material defect caused by the manufacturer, seller or service provider, or to be counterfeit, with confirmation by an expert examination where required.

For an unfit food product, Part 8 of Article 8 sets a separate rule: the seller must replace it with one fit for consumption or refund the money paid. The settlement is made under the rules in paragraph three of Part 7 of that Article. The seller must accept goods of improper quality; if the seller proves that the defect arose because the buyer breached the rules for use or storage, claims under this Article are not to be satisfied.

The seller or manufacturer pays to deliver bulky goods and goods weighing more than five kilograms to the seller and return them to the buyer. Inspection at a branch does not end the buyer’s warranty rights.

For termination of the contract due to a defect, refund the money on the day of termination or, if that is impossible, within a period agreed with the buyer but no later than seven days. Under Part 7 of Article 8, if the price has increased, the amount is based on the product’s value when the buyer makes the claim; if the price has decreased, it is based on the value at the time of purchase.

How to document an actual refund

Link the buyer’s request to the original order, sales document and payment. Record the returned items, grounds, refund amount and agreed payment details. After the transfer is made, retain the payment document and account statement. If the refund is a settlement transaction, issue the relevant fiscal document under the applicable procedure.

The “money refunded” status in the accounting software must match an actual payment. For unified tax, subparagraph 5 of paragraph 292.11 allows qualifying refunded amounts to be excluded from income on the specified grounds: return of goods, termination of a contract, or a written request for a refund. If the original income has already been declared, the accountant determines the necessary reporting adjustment from the documents.

How to reduce refusals without improper deductions

COD can make it easier for a customer to decide to buy because the consumer pays upon receipt and can inspect the goods as permitted by the service. However, inspection does not always allow full testing of equipment or detection of a hidden defect. The seller should explain in advance what inspection is available and how to make a warranty claim.

To reduce refusals, confirm the size, color, configuration and compatibility of the goods before dispatch, give a realistic delivery time and provide the shipment number. If the buyer changes their mind before dispatch, cancelling promptly can avoid unnecessary transportation. Analyze refusal reasons by product: an inaccurate description and incorrect configuration require different fixes.

A partial advance payment can be offered as an agreed sales term. State in the message what the advance covers, how it is credited against the price, and how it will be refunded in the event of a lawful refusal. Do not automatically retain the buyer’s entire advance payment by calling it a “delivery deposit.” Withholding funds requires a specific legal basis; mandatory consumer rights remain in force.

Once even a partial advance has been received, the order no longer meets the condition of full COD without an advance in the Supreme Court case discussed above. Check the method of accepting the advance and the procedure for documenting the remaining payment separately before launching such an arrangement.

How to calculate costs and working capital needs

Illustrative COD economics example. A store shipped 100 identical orders at UAH 2,000 each. The cost of each unit is UAH 1,300. Buyers paid for and collected 90 orders, while 10 orders were returned undamaged. For this example, assume the fee payable by the seller is UAH 26 per collected order, packaging costs UAH 20 per shipment, and round-trip transportation for an uncollected parcel costs the store UAH 180. Buyers pay the operator separately for delivery of collected parcels.

• Revenue: 90 × 2,000 = UAH 180,000.
• Cost of goods sold: 90 × 1,300 = UAH 117,000.
• Difference between revenue and the cost of goods sold: UAH 63,000, or 35% of revenue.
• Fees: 90 × 26 = UAH 2,340.
• Packaging: 100 × 20 = UAH 2,000.
• Transportation for uncollected parcels: 10 × 180 = UAH 1,800.
• Balance after the listed costs: 63,000 − 2,340 − 2,000 − 1,800 = UAH 56,860.

This is a calculated result before taxes, advertising, wages, rent and other costs not included in the example. It is not a profit forecast. The 10 returned units, with a total cost of UAH 13,000, remain in stock if they are fit for resale.

If the store paid for all 100 units up front, it spent UAH 130,000 on stock. Until payments and returns are completed, some of this money remains invested in shipped goods. Plan separately for funds to buy the next batch, pay for delivery and refund buyers. A sale that is profitable according to the calculation may temporarily cause a cash shortage while transfers are pending.

Tracking COD and Nova Poshta deliveries in Torgsoft

In Torgsoft, the additional “Integration with Nova Poshta” feature lets users create, print and track TTNs while working with outgoing delivery notes in “Trade with invoice issuance” mode. It requires activation of the option, internet access, a valid Nova Poshta API access key, a configured sender and addresses. The employee checks the recipient, COD amount, who pays for delivery and whether the TTN matches the order. Check that the mode and options are compatible with your selected license: for example, “Start” does not include trade with invoice issuance.

First determine whether the specific sale requires fiscalization. For transactions that do, use a registered RRO or PRRO. Before starting, check the provider’s official instructions for compatibility with your sales mode, required options, details, product settings and how the buyer receives the receipt. A TTN or printed sales document does not by itself prove that fiscalization has taken place. For full COD that meets the Supreme Court’s conclusion on the absence of a seller settlement transaction, keep appropriate goods and payment documents instead of applying an automatic rule that the seller must issue a receipt for every shipment.

Reconcile delivery statuses against the NovaPay report and account statement: carrier integration does not automatically confirm that payment has been credited in the accounting records.

For a sale processed through the “Sale” form, after goods are actually returned, open “Return”, select the relevant sale and enter the returned items and quantities. If the sale was processed in “Trade with invoice issuance” mode, check the instructions for that mode or ask Torgsoft support how to process the return before doing so. Make sure the program’s record of a refund matches the actual payment and its documents. Set the software’s return period in line with the applicable buyer rights. To reconcile stock and goods movements, use the “Warehouse status” form.

When stock accounting is required under Order No. 496

Separately check whether the entrepreneur is required to keep stock records under paragraph 12 of Article 3 of Law No. 265/95-VR. The requirement does not apply to individual entrepreneurs who are unified tax payers and are not VAT-registered, except those selling specified product categories: technically complex household goods subject to warranty repair, medicinal products, medical devices, and jewelry and household articles made of precious metals, precious stones, precious stones of organic origin or semi-precious stones.

If the requirement applies, keep the Record Form under Order No. 496 of the Ministry of Finance of Ukraine, along with the source documents. Record incoming goods before they are sold. A cashless sale that, in a case provided for by law, is made without an RRO or PRRO is recorded as a disposal under the Procedure’s rules. Do not automatically assume that an ordinary warehouse report meets all the requirements for this Form.

Which rules to check for your COD arrangement

Consumer rights in the situations discussed here are governed by Law No. 1023-XII. The general entry into force of Law No. 3153-IX is linked to the termination or cancellation of martial law; do not prematurely apply its return rules in place of those currently in force. For a practical review, use these provisions:

• Law of Ukraine No. 265/95-VR: Article 2 defines a settlement transaction; paragraphs 1, 2, 12 and 15 of Article 3 cover fiscalization, documents and stock; Article 9 covers statutory cases where an RRO is not required.
• Supreme Court judgment in case No. 520/27700/25, section 4.1.2: assessment of full COD with no advance through NovaPay, credited to a business current account, and the limits of that conclusion.
• Tax Code of Ukraine: paragraphs 292.1, 292.4, 292.6, 292.11 and 296.1 cover unified tax income and records; paragraphs 177.2–177.4 cover net income for an individual entrepreneur under the general system; paragraph 187.1 covers the first event for VAT; Article 44 covers documentary evidence and retention.
• Law of Ukraine “On Consumer Protection” No. 1023-XII: Article 8 covers defective goods; Article 9 covers exchange of conforming goods; Article 13 and Parts 5–9 of Article 12 cover distance contracts and the consequences of termination; Articles 15 and 17 cover information and rights during service.
• Law of Ukraine “On Electronic Commerce”: Article 7 covers seller information; Article 11 covers contracts and transaction confirmation; Article 13 covers payments and documents confirming receipt of funds.
• Law of Ukraine No. 3153-IX, paragraph 1 of Section IX: conditions for entry into force.