How a Sole Proprietor Can Get Sick Pay

A sole proprietor (FOP) on the simplified or general tax system may receive benefits for their own illness if they qualify for an insurance benefit supported by a sick leave certificate and Unified Social Contribution (USC) records. The Pension Fund of Ukraine (PFU) pays for calendar days of incapacity for work starting on the sixth day. The first five days are not reimbursed to the entrepreneur for their own illness. The amount depends on the income on which USC was paid, the insurance record, and the applicable limits.

To receive the money, the entrepreneur checks the sick leave certificate and contributions, calculates the benefit, records the decision to award it, and submits a benefit calculation application to the PFU. The funds are paid into a separate account. The FOP withholds personal income tax (PIT) and the military levy from the benefit, pays themselves the remainder, notifies the PFU of the payment, and files tax reports. You must apply for the benefit within six calendar months after regaining the ability to work.

Check eligibility and USC payments

You become eligible for sick pay if the illness began while you were engaged in entrepreneurial activity and you were insured. FOP registration alone is not enough to qualify for payment: the PFU checks records of USC accrual and payment.

Check your contributions for the calculation period and for the month in which the illness began. The PFU explains that an entrepreneur must have paid USC to qualify for the benefit, including for the month of the insured event. Records from the register, OK-5 or OK-7 statements, State Tax Service (STS) records, and documents confirming no outstanding debt can be used as evidence. PFU explanation of contributions and documents for FOPs.

Compare your payment records with the information in the STS Electronic Cabinet and on the PFU portal. If you have outstanding debt, a new payment may be credited toward old contribution arrears, fines, and late-payment interest in order of when they arose. A transfer receipt alone therefore does not confirm that the contribution for the required month was credited in full.

The general deadline for paying USC for yourself is before the 20th day of the month following the relevant quarter. To arrange the benefit, ensure that your USC payment for yourself for the month in which the illness began is recorded at the statutory amount, no lower than the minimum insurance contribution, if you have legal grounds to pay it for that month. If the payment or reporting data are not shown, contact the STS to reconcile the records and the PFU about the information in the register.

How USC exemptions apply

• If your employer paid at least the minimum insurance contribution for you for a month, Part 6 of Article 4 of Law No. 2464-VI exempts you from paying USC for yourself for that month. This provision does not allow you to set your own USC base for that month. If it is the month your illness began, arrange sick pay through your employer. If the employer’s contribution is below the minimum, the FOP may set their own USC base and pay a contribution no lower than the minimum. To qualify for a benefit based on your entrepreneurial activity, check with the PFU that your own contributions were paid and recorded.
• FOPs who receive an old-age or length-of-service pension, have a disability, or belong to other categories listed in Part 4 of Article 4 of Law No. 2464-VI may be exempt from paying USC for themselves. If an entrepreneur uses this exemption and does not participate in insurance voluntarily, they are not eligible for sick pay based on their entrepreneurial activity.
• Under the general tax system, an entrepreneur with no income for a month may independently set a USC base under Article 7 of Law No. 2464-VI. A month without a contribution must be considered separately when checking eligibility and calculating the benefit.

Do not exclude every month without USC from the calculation. Procedure No. 1266 expressly allows exclusion of a period of exemption under Part 6 of Article 4 of Law No. 2464-VI, when the employer paid the contribution. An exemption for a pensioner or a person with a disability under Part 4 of that article does not, by itself, create grounds for exclusion.

Get a sick leave certificate and check it in your PFU account

See a doctor when you become ill. The doctor determines your incapacity for work and creates a medical conclusion. An electronic sick leave certificate is formed on that basis. The sick leave certificate itself is required to award the benefit; a notification about the medical conclusion does not replace it.

Sign in to the PFU web portal and check the sick leave certificate number, reason for incapacity, dates, and status. For your own illness, the electronic sick leave certificate is considered issued seven days after its closure date. After that, proceed with calculating and awarding the benefit. If the status “Ready for payment” appears earlier, wait until the seven-day period has ended. If needed, generate an extract from the register. If the certificate does not appear or contains an error, contact the doctor about medical data and the PFU about insurance records and the document’s status.

If an electronic sick leave certificate cannot be generated, the law allows a paper certificate in cases specified by the Ministry of Health of Ukraine (MOH). The healthcare facility determines whether grounds for issuing one exist. If you are also employed under an employment contract, a copy of the paper certificate certified by the manager and stamped, if the employer has a stamp, at your primary place of employment is required to arrange payment for your other activity. If you carry out entrepreneurial activity and another activity without an employment contract, the facility that issued the certificate certifies the copy.

For your own illness, the PFU funds the days from the sixth day until you regain the ability to work or a disability is established in the manner prescribed by law. If the illness lasted five days or fewer, there are no days payable by the PFU. If one period of incapacity is extended, check that the certificates are linked so you can determine the payable period correctly.

Prepare your information and documents

An FOP may ask an accountant to prepare the calculation and documents. The decision to award the benefit is made by the policyholder—the entrepreneur or a person authorized by them.

Gather:

• the electronic sick leave certificate or a properly completed paper certificate;
• information about your total insurance record and your insurance record for the last 12 months;
• monthly data on income on which USC was paid and the contributions paid;
• documents covering periods that must be excluded from the calculation;
• documents confirming entitlement to a preferential benefit rate, if the relevant data are not available in government systems;
• the details of a separate bank account for insurance funds.

How to submit USC information before the end of the year

If the required information has not yet reached the register through annual reporting, submit a tax return to arrange insurance benefits. FOPs in groups 1–3 of the single tax system submit a tax return marked “Reporting” and additionally “For information purposes,” together with Annex 1 on USC. In Annex 1, specify the purpose as “award of material support, insurance benefits” and state the month in which the insured event began. In Section 8, specify the period from the end of the previous reporting period through and including the date the insured event began, during which you were a USC payer under the simplified system, and enter insured-person category code “6.” Complete the monthly data for this period. An information-only filing does not replace the tax return and Annex 1 for the regular reporting period. STS instructions for single tax payers.

An FOP under the general tax system submits a property and income tax return marked “Reporting” and additionally “For information purposes,” together with USC1 Annex. In the annex, also select “Reporting” and “For information purposes,” and state the purpose as “award of material support, insurance benefits.” In line 4.1 of USC1 Annex, specify the month in which the information-only return is filed. In line 8, specify the period during which you were registered as a USC payer, from the end of the previous reporting period until the date the insured event began. Complete the table with monthly data current as of the date the insured event began, including data for the month in which the illness began. An information-only return does not replace regular reporting for the relevant reporting period. STS explanation of USC1 Annex.

An FOP in group 4 of the single tax system submits a group 4 single tax payer return with the boxes “General,” “Reporting,” and “For information purposes” all selected, together with Annex 2 on USC. In Section 5 of the annex, state the purpose as “award of material support, insurance benefits,” and enter the month in which the illness began in the month field. This filing does not replace regular reporting. Group 4 return and Annex 2 forms.

Calculate the sick pay

Use income on which USC was paid for the calculation. Do not automatically substitute store turnover, receipts into a business account, or profit for this base.

1. Determine the calculation period: as a general rule, it is the 12 calendar months before the month in which the illness began. For example, for an illness beginning in October, use the period from October of the previous year through September. If the activity lasted less time, apply the rules in Procedure No. 1266 for the actual period: full calendar months or calendar days before the insured event.
2. Total the income included in the calculation and determine the number of calendar days of entrepreneurial activity in that period.
3. Exclude days for valid reasons specified in paragraph 3 of Procedure No. 1266. For an FOP, these include a previous period of incapacity for work and a period of exemption from USC under Part 6 of Article 4 of Law No. 2464-VI. Exclude full months under the conditions set out in that paragraph.
4. Do not include income for full months excluded from the calculation period for valid reasons. Divide income for the remaining period by the calendar days left. If the entire calculation period is excluded for valid reasons, or the illness began on the first day of entrepreneurial activity, calculate the average daily income from the minimum wage on the date of the insured event divided by 30.44, provided the person is eligible for the benefit.
5. Apply the percentage corresponding to the insurance record, check the limits, and multiply the daily benefit by the payable calendar days of illness.

The insurance record covers confirmed periods of insurance, including employment under an employment contract before FOP registration. A full month is generally credited if the contribution for that month is at least the minimum. If the contribution is lower, the month is credited proportionally under the rules in Article 14 of Law No. 1105-XIV.

Some categories are entitled to 100% regardless of their insurance record. Article 17 of Law No. 1105-XIV provides these benefits, in particular, for people in categories 1–3 affected by the Chornobyl disaster, war veterans, participants in the Revolution of Dignity who suffered harm, the categories of family members of people killed specified by law, victims of Nazi persecution, donors entitled to the relevant benefit, and certain rehabilitated persons. Entitlement must be confirmed.

Check two limits

If you have less than six months of insurance record in the 12 months before the illness, the benefit is limited to an amount calculated using the minimum wage in effect at the time of the insured event. The daily benefit cannot exceed the minimum wage divided by 30.44. This limits the amount; having less than six months of insurance record does not by itself disqualify an insured FOP from receiving a benefit.

Average daily income also cannot exceed the maximum USC base for the last month of the calculation period divided by 30.44. The monthly benefit is capped at the maximum USC base. The law does not set a general rule requiring ordinary sick pay to be topped up to the minimum wage.

Illustrative calculation

Suppose an FOP was ill for 12 calendar days. Their total insurance record is 6 years, and every month in the last 12 months is credited in full. The income included in the calculation is UAH 146,000, and the calculation period is 365 calendar days with no exclusions. The daily amount does not exceed the applicable limits.

In this example, the benefit calculation application includes the accrued benefit of UAH 1,960. After tax withholding, the entrepreneur receives UAH 1,509.20. For your own calculation, use confirmed income, insurance record, days, and limits applicable to your insured event.

Award the benefit and apply to the PFU

Record a written decision to award the benefit. Include the date, FOP details, sick leave certificate number, period of incapacity, payable days, insurance record, percentage, and amount. Attach the calculation. Documents for awarding ordinary sick pay must be reviewed no later than ten working days after receipt.

Open a separate current account at a bank for insurance funds. Tell the bank what the account is for and obtain its International Bank Account Number (IBAN). You may use an existing account only if it meets this requirement.

Within five working days of the decision, submit a benefit calculation application using the form in Annex 1 to Procedure No. 28-1. Enter the account details and the insured person’s details, sick leave certificate information, insurance record, payable days, and accrued benefit. You can submit the document:

• through the PFU web portal using a qualified electronic signature or a permitted advanced signature based on a qualified certificate;
• in person to a territorial PFU office;
• by post in paper form;
• through Diia, if the relevant technical function is available.

The PFU obtains information available in government systems through electronic exchange. If required information is unavailable, attach documents confirming the insured event, contributions, entitlement, or other circumstances. Color scans must include every page and field of the document. The procedure allows JPG or PDF files up to 1 MB each; the recommended scanning quality is 300 dpi.

Check the validation receipt. If processing of the application is suspended pending correction, the PFU must notify you of the defects, how to fix them, and allow at least three working days to do so. Create a corrected application using the previous application’s data and resubmit it. The status “Accepted” is required for funding. The PFU transfers the money within three working days after receiving an accepted benefit calculation application.

Pay taxes and report the payment

Sickness benefits are taxable income of an individual. Under the standard procedure, when an FOP awards themselves a benefit and receives funding into a separate account, they act as a tax agent: they withhold 18% PIT and a 5% military levy. On the day the PFU pays the benefit into the separate account, pay PIT and the military levy at the same time as you withdraw the money from the bank or transfer the benefit to your personal account. If the benefit has been accrued but not yet paid, taxes must be paid no later than 30 calendar days after the month of accrual; if that date falls on a weekend or public holiday, it moves to the next banking operating day. STS explanation of FOP tax agent duties and payment deadlines.

No separate USC is charged on a benefit an entrepreneur receives for themselves. However, being on sick leave does not by itself exempt you from ordinary USC obligations for your entrepreneurial activity. A single tax payer does not include targeted PFU funds in entrepreneurial income under subparagraph 4 of paragraph 292.11 of the Tax Code of Ukraine (TCU). Under the general tax system, sick pay is also not revenue from entrepreneurial activity.

Report the benefit and withheld taxes in the quarterly Tax Calculation, broken down by month, in the ФІЗ-4ДФ appendix with income code “127.” The general deadline for filing the quarterly calculation is 40 calendar days after the end of the quarter, subject to the rules for moving a due date. This is required even if the FOP has no employees but accrued taxable benefits for themselves. Quarterly Tax Calculation form for FOPs; Income code for an entrepreneur’s sick pay.

The benefit must be paid to the FOP within ten working days after it is awarded, under paragraph 2 of Part 2 of Article 24 of Law No. 1105-XIV. After payment, submit a notice to the PFU using the form in Annex 2 to Procedure No. 28-1. The deadline is no later than 30 calendar days after the funds are credited to the separate account and the application has been given the status “Paid.” Keep the notice, its acceptance receipt, the decision, the calculation, and payment documents. If you do not submit the notice within three months, the PFU has grounds to conduct an unscheduled inspection.

What may prevent payment

Follow the medical regimen prescribed by your doctor and attend checkups. If you violate the regimen or miss an appointment without a valid reason, you may lose entitlement to the benefit from the day of the violation for the period specified by the body that awards it.

Article 16 of Law No. 1105-XIV provides for denial, in particular, if a person was injured or fell ill while committing a criminal offense, intentionally harmed their health to avoid work or other duties, or feigned illness. Benefits are also denied if the illness or injury resulted from alcohol, narcotic, or toxic intoxication, or from actions related to such intoxication. Benefits are also not provided for periods of arrest, forensic medical examination, compulsory treatment ordered by a court, or a sick leave certificate deemed unjustified.

If you are also employed under an employment contract, benefits through that job are not provided for days of unpaid leave, creative leave, or additional study leave. Check eligibility for benefits based on your entrepreneurial activity separately, taking into account USC payments for yourself. Determine the calculation period and average income separately for each job and entrepreneurial activity. To claim payment for other activity, use a salary certificate from your primary place of employment or the relevant individual records from the insured persons register. If you have several secondary jobs alongside your primary employment, attach average salary certificates from those employers. Check that the total salary used to calculate payments from your primary job and secondary jobs does not exceed the maximum USC base for each month in the calculation period.

If you closed your FOP during your illness, eligibility for a benefit for an insured event that began while you were engaged in insured activity does not end solely because the business was closed. During state registration of the closure or removal from the register, contact a territorial PFU office: the law provides a separate procedure for awarding and paying the benefit. If the PFU directly accrues and pays the benefit to you, the PFU performs the tax agent duties. Check the taxes withheld against the payment documents; you do not need to withhold them again or report this income as an FOP.

Use the funds in the separate account for the insurance benefit and related tax payments. Do not use it to pay for goods, rent, or store debts. Return any unused balance to the PFU within three working days. If you discover an error in the accrual yourself, return the excess amount and send a written explanation at the same time.

Return insurance funds used improperly to the PFU. A fine of 10% of the amount returned late or not returned in full applies to late or incomplete repayment of insurance funds. Late interest of 0.1% is charged for each day of delay on funds not repaid on time and on penalties. The PFU may refuse funding because of inaccurate information, misuse of funds, or obstruction of an inspection. The decision must state the grounds and appeal procedure; it may be appealed administratively and/or in court.

Official sources

• Law of Ukraine “On Compulsory State Social Insurance” No. 1105-XIV: Part 6 of Article 8; Articles 11–17; Parts 1 and 3 of Article 22; Article 23; Parts 1, 2, and 5 of Article 24; Articles 25–26.
• Cabinet of Ministers of Ukraine (CMU) Resolution No. 1266 of 26 September 2001 on calculating average salary and income for insurance benefits: paragraphs 2–5, 25–30, and 30-1 of the Procedure.
• Law of Ukraine “On Collection and Accounting of the Unified Contribution to Compulsory State Social Insurance” No. 2464-VI: item 4 of Part 1 and Parts 4 and 6 of Article 4; items 2–3 of Part 1 of Article 7; Part 8 of Article 9; Part 6 of Article 25.
• PFU Board Resolution No. 28-1 of 19 August 2025 on funding insurance benefits: paragraphs 3–9 and 11–14; Annexes 1–2.
• Tax Code of Ukraine No. 2755-VI: subparagraph 49.18.2; paragraph 167.1; subparagraphs 168.1.1, 168.1.2, and 168.1.5; subparagraph “b” of paragraph 176.2; paragraph 177.6; subparagraph 4 of paragraph 292.11; subparagraphs 1.3–1.6 of paragraph 16-1 of Subsection 10, Section XX.