Payment for employee training: personal income tax, social security contributions, military levy, limits and accounting

Payment for Employee Training, Preparation, and Professional Development at the Employer's Expense: Taxes, SSC, Documents, and Accounting

Paying for employee training is a common business practice: the employer invests in people, and the employee gains new knowledge, certification, or professional development. However, the tax outcome of such expenses depends not on the name of the payment, but on who is being paid, for what type of training, under what contract, and whether the conditions of the Tax Code are met. (Law of Ukraine)

For the employer, there are three basic models that should not be mixed:

1. Payment for education, preparation, or retraining of an individual in favor of domestic higher or vocational education institutions is a special benefit under subparagraph 165.1.21 of the TCU, but with a limit on the amount for each full or partial month of study. (tax.gov.ua)

2. Payment for professional development or retraining of an employee according to the law is a separate benefit under subparagraph 165.1.37 of the TCU. It is not tied to the three-fold minimum wage amount, but it is crucial that the professional development is specifically "according to the law" and properly documented. (tax.gov.ua)

3. Compensation to an employee for their own expenses or payment for a service where the recipient is the employee rather than the employer is the riskiest model. In many cases, it turns into taxable additional benefits. (ZIR)

When Training Payment is Not Subject to PIT and Military Tax

1. Payment for education, preparation, or retraining under subparagraph 165.1.21 of the TCU

The amount paid by a legal entity or a Sole Proprietor (FOP) in favor of domestic higher and vocational education institutions for the education, preparation, or retraining of the taxpayer is not included in the taxable income of an individual, provided it does not exceed three times the minimum wage established as of January 1 of the reporting year for each full or partial month of study. (tax.gov.ua)

In 2026, the minimum wage as of January 1 is 8,647 UAH; therefore, the tax-free limit under subparagraph 165.1.21 of the TCU equals 25,941 UAH per each full or partial month of study. (Law of Ukraine)

An important practical point: the law does not require monthly payments. If an enterprise pays for training in a lump sum for a semester, year, or several periods, for tax purposes, the limit should be compared not with the total payment amount, but with the cost of one month of study. This position is explicitly confirmed by the State Tax Service in its clarifications. (ZIR)

2. Payment for professional development under subparagraph 165.1.37 of the TCU

Separately, the TCU does not include in the taxable income the employer's expenses related to professional development (retraining) of the taxpayer according to the law. This is a different basis from the payment for education under subparagraph 165.1.21 of the TCU. Therefore, it is important for the employer to correctly determine the nature of the expenses: is it obtaining an education or professional development/retraining. (tax.gov.ua)

For this model, documentary evidence that the employer sent the employee for training specifically for professional development, advanced training, or retraining in accordance with the law and work needs is of critical importance. (Law of Ukraine)

3. Seminars, Trainings, Conferences

If, under the contract, the employer is the recipient of consulting or information services, and the employee only represents them at the seminar or conference, the payment for such participation does not constitute income for the employee. However, if the contract states that the recipient of the service is the employee themselves, the State Tax Service views the payment by the employer as the employee's additional benefit. (ZIR)

When PIT and Military Tax Arise

Payment for training becomes taxable for the employee if the conditions of the special benefits of the TCU are not met. Typical cases include:

Taxation arises if:

• funds are paid not in favor of a domestic institution of higher or vocational education, but to another entity, and subparagraph 165.1.37 of the TCU is not applied; (tax.gov.ua)

• training is paid for in a foreign educational institution — the benefit of subparagraph 165.1.21 of the TCU does not apply to such payment; (tax.gov.ua)

• the cost of training exceeds the limit under subparagraph 165.1.21 of the TCU; in this case, only the excess amount is taxed, not the total payment; (tax.gov.ua)

• the employee paid for the training independently, and the employer later compensates them for these costs; (dp.tax.gov.ua)

• under the contract, the service is provided to the employee personally rather than to the employer. (ZIR)

In such cases, the employee's income is generally qualified as an additional benefit. PIT is charged at a rate of 18%, and the military tax is 5%. (Law of Ukraine)

If the employer pays a third party directly for the employee, i.e., the employee does not receive cash, income in non-monetary form arises. In this case, for PIT purposes, the tax base is determined using a "gross-up" coefficient according to paragraph 164.5 of the TCU. This coefficient does not apply to the military tax. (ZIR)

SSC: When it is Safer and When there is Risk

The safest model from an SSC perspective is when the employer independently pays for training directly to the educational institution or training provider. Cabinet of Ministers Resolution No. 1170 includes expenses for staff training, retraining, and professional development in the list of payments on which SSC is not charged. (Law of Ukraine)

This is why it is safest for the business:

• not to give the employee cash "for training";

• not to frame the payment as reimbursement for personal expenses if it can be avoided;

• to transfer funds directly to the educational institution or service provider under a contract on behalf of the employer. (Law of Ukraine)

Targeted Charitable Assistance for Training

Separately, the TCU allows for non-taxable targeted charitable assistance for training. This refers to funds that a resident legal entity or FOP transfers directly to an educational institution for training, additional educational services, accommodation, meals, maintenance, and other legally prescribed expenses for defined categories of persons. The amount of such assistance is unlimited. (dp.tax.gov.ua)

Eligible categories include, in particular:

• persons with disabilities;

• children with disabilities;

• children where at least one parent has a disability;

• orphans or half-orphans;

• children from large or low-income families;

• children whose parents are deprived of parental rights. (dp.tax.gov.ua)

For this model, it is vital that the assistance is targeted and the funds are transferred to the educational institution rather than to the individual. (dp.tax.gov.ua)

How to Properly Document Training Payments

For an employer, tax safety begins with documentation. The minimum package of documents should include:

• an order or decision by the manager to send the employee for training;

• justification of the link between the training and the enterprise's activities or the employee's position;

• a contract with the educational institution or training provider;

• invoice, act, program of the course, calendar plan;

• payment documents;

• a document confirming the result of the training: diploma, certificate, license, act of services rendered;

• if necessary — a separate contract with the employee regarding the parties' obligations, term of work, and compensation for expenses in case of breach of agreements. (Law of Ukraine)

If the employer wants to protect their expenses, it is advisable to conclude two separate contracts:

1. with the educational institution or service provider;

2. with the employee being sent for training. (Law of Ukraine)

The Standard Provision approved by the Ministry of Labor recommends including essential conditions in the contract with the educational institution: subject, number of persons, direction and form of study, term, cost, payment procedure, rights and duties of the parties, responsibility, and the procedure for amendment and termination. It is recommended to attach an estimate, educational programs, a schedule for sending employees for training, and a financing schedule. (Law of Ukraine)

In the contract with the employee, it is advisable to stipulate:

• the name of the training, its duration, and location;

• the employee's obligation to successfully complete the training;

• the procedure for confirming the result;

• the minimum period of work after completion of training;

• cases where the employee compensates the employer for expenses;

• valid reasons when compensation does not apply. (Law of Ukraine)

Can Mandatory Service After Training Be Required?

Yes, but not automatically. The safe model for the employer is to explicitly stipulate this in a written contract with the employee. Normative recommendations from the Ministry of Labor allow for additional conditions, including a minimum term of work after training, as well as compensation of expenses if the employee refuses to study without valid reasons, fails to complete the training, or violates contract terms. (Law of Ukraine)

It is the contract, rather than a general phrase in an order, that provides the employer with a real tool to protect their expenses.

Guarantees for Employees Sent for Training

If an employee is sent for professional development away from work, their job and payments provided by law are maintained. For specific cases of studying in higher education institutions, the Labor Code also provides for compensation of part of the travel costs. (Law of Ukraine)

These norms are important not only for HR documentation but also for proper differentiation: where it is about obtaining education and where it is about sending an employee for professional development related to work. (Law of Ukraine)

Tax Reporting: How to Show in 4DF

In Appendix 4DF to the tax calculation, the income code depends on the legal nature of the payment.

Most Common Codes:

This coding system is established by the Procedure for filling out the tax calculation and the directory of income attributes approved by the Ministry of Finance, and the State Tax Service uses these same codes in its official clarifications. (Law of Ukraine)

Accounting for Training Expenses

In accounting, expenses are recognized when there is a decrease in assets or an increase in liabilities that leads to a decrease in the enterprise's equity. This is the general rule of NP(S)BU 16. (Law of Ukraine)

In practice, training expenses are allocated according to their functional purpose:

• training of administrative staff — to administrative expenses;

• training of sales staff — to selling expenses;

• training of production staff — to production or general production expenses, depending on the nature of the costs.

If training is paid in advance for future periods, the enterprise may use account 39 "Prepaid expenses" with subsequent write-off during the training period. Such an account is directly provided for by the Instructions on the application of the Chart of Accounts. (Law of Ukraine)

VAT: What to Watch For

Supply of educational services may be exempt from VAT under subparagraph 197.1.2 of the TCU if the services are provided by an educational institution that has the right to such activity, and the service itself belongs to the list of educational services covered by the exemption. Therefore, before payment, it is worth checking the provider's status and the nature of the service: this affects the invoice amount and tax documents. (Law of Ukraine)

Practical Example

In January 2026, an enterprise paid a university 311,292 UAH for 12 months of employee training. For tax purposes, the monthly cost should be determined: 311,292 / 12 = 25,941 UAH. Since this equals three times the minimum wage as of January 1, 2026, this payment falls within the limit of subparagraph 165.1.21 of the TCU and does not create taxable income for the employee. This approach — comparing the limit with the cost of one month of training even if the whole year is paid at once — is confirmed by the State Tax Service. (Law of Ukraine)

Conclusion

The safest model for an entrepreneur is to pay directly to the educational institution or training provider, correctly determine the legal basis for payment, and collect a full package of documents. If it is about obtaining education — check the conditions of subparagraph 165.1.21 of the TCU and the monthly limit. If it is professional development for work — frame it as professional development of the employee under subparagraph 165.1.37 of the TCU. Compensation to an employee "after the fact" or an incorrect contract with the provider often turns a safe expense into a taxable additional benefit. (tax.gov.ua)

Official Sources

• Tax Code of Ukraine, No. 2755-VI: subparagraphs 165.1.21, 165.1.37, norms on additional benefits, paragraph 164.5, PIT rate, norms on military tax, targeted charitable assistance. (Law of Ukraine)

• Law of Ukraine "On the State Budget of Ukraine for 2026", No. 4695-IX, Article 8 — minimum wage for 2026. (Law of Ukraine)

• Law of Ukraine "On the Collection and Accounting of Unified Contribution...", No. 2464-VI, and CMU Resolution of 22.12.2010 No. 1170 — list of payments on which SSC is not charged, including expenses for training, retraining, and professional development of staff. (Law of Ukraine)

• Law of Ukraine "On Professional Development of Employees", No. 4312-VI — rules for professional training and development of employees. (Law of Ukraine)

• Order of the Ministry of Labor of 10.08.2010 No. 232 "On approval of the Model Procedure for the conclusion of contracts by business entities regarding training, retraining and professional development of employees." (Law of Ukraine)

• Labor Code of Ukraine, Articles 122 and 219 — guarantees for employees sent for professional development or combining work with study. (Law of Ukraine)

• NP(S)BU 16 "Expenses" and Instruction on the application of the Chart of Accounts, Ministry of Finance Order No. 291 — general rules for the recognition of expenses and use of account 39 "Prepaid expenses." (Law of Ukraine)

• Ministry of Finance Order No. 4 on the form and procedure for filling out the tax calculation, as well as the directory of income attributes for 4DF. (Law of Ukraine)

• Official Clarifications of the STS / ZIR regarding one-time payment for a long training period, seminars, conferences, and taxation of employee training payments. (dp.tax.gov.ua)