A sole proprietor goes on vacation or How to avoid paying a single tax

Due to the introduction of quarantine in Ukraine, many individual entrepreneurs have temporarily suspended their activities. To support small businesses, legislators allowed them not to pay the unified social contribution for themselves for the period from March to April, but forgot about the single tax (hereinafter referred to as the ST). And while sole proprietors in the third group of the single tax without income do not have to pay the single tax, sole proprietors in the first and second groups will have to pay it, since their tax rate is fixed. But there is a way out of this situation - to go on vacation. How to do it? Read in this article.

Under what conditions can a sole proprietor go on vacation?

A sole proprietor on the general taxation system and a sole proprietor on the third group of the single taxation system may not consider the vacation option, as it does not bring any benefit to them. Why? Because their tax amount depends directly on their income for the period. No income - no EH. But for sole proprietors of the first and second groups, the amount of the single tax is fixed and is equal to: 10% of the subsistence minimum for Group 1 and 20% of the minimum wage for Group 2.

However, the Tax Code of Ukraine provides for exemption from the single tax for groups 1 and 2 of individual entrepreneurs for the period of vacation, but subject to a number of conditions:

1. Lack of hired employees

Everything is clear with the first group of sole proprietors; they cannot use hired labor in principle.

But a sole proprietor in the second group can use hired labor. However, in order to apply for a vacation, the sole proprietor must not have used hired labor since the month preceding the month of the vacation. This means that at the time of applying for a vacation, the sole proprietor must not have any employees.

The only exceptions are employees who are on maternity, paternity, or mobilization leave. The presence of such employees will not prevent you from going on vacation.

2. Duration of vacation

An individual entrepreneur can go on vacation once a year for one calendar month. You cannot go on vacation for three months and not pay the unified social tax. You can only save on one month.

Please note that the Tax Code does not provide for the possibility of dividing vacation time. You cannot take two weeks of vacation now and two weeks in the summer, for example. In order to save on the unified social tax, you need to take a vacation from the first day of the month until the last day of the calendar month. That is, you cannot take a vacation, for example, from April 27 to May 27.

3. Frequency of vacation

As we wrote above, you can only take a vacation once a year. If you have already used your vacation right before, you will continue to have to pay the EH.

Do sole proprietors need to apply for a vacation?

It is required. Sole proprietors of groups 1 and 2 must notify the tax office at the place of registration of their intention to go on vacation. To do this, you must submit an application for annual leave in any form. There are no specific deadlines for submitting such an application, but it must be done before the start of the vacation.

Since the Tax Code provides for a calendar month's leave, the application must specify a full month.

If you paid the EH in advance, such an overpayment will be taken into account for future months, but you need to indicate this in your vacation application.

An example of a vacation application for a sole proprietor:

You can submit an application through the taxpayer's electronic cabinet. In the section "Correspondence with the State Tax Service".

Income during vacation

During the calendar month in which the vacation falls, the sole proprietor must not carry out business activities If you receive income during the vacation, you will have to pay a single tax.