Sole Proprietor in Tax Group 3: How to File Returns and Pay Taxes Online

A natural person entrepreneur (FOP) in Tax Group 3 can file tax returns electronically and pay required contributions through a bank. The entrepreneur must check income from all sales channels, complete the return correctly, receive confirmation that it was accepted, and monitor how payments are recorded by the State Tax Service of Ukraine (DPS). Connecting a bank service does not, by itself, transfer responsibility for taxes to the bank.

To organize this work, prepare income records, a valid electronic signature, and a calendar with separate due dates for the return, the single tax, the military levy, and the single contribution for mandatory state social insurance (SSC). The rules below apply to entrepreneurs in Ukraine using the standard Group 3 single-tax regime. E-residents follow a separate procedure.

What Draft Law No. 8226 means for entrepreneurs

Draft Law No. 8226 on a special tax regime for certain Group 3 taxpayers is being considered by a parliamentary committee. It is a proposal, not a current legal basis for having a bank automatically file returns and pay taxes. You can check its status in the official draft law record.

Ukraine’s current Tax Code provides for a bank to act as a tax agent for Group 3 e-residents. This special rule cannot be applied to an ordinary Ukrainian entrepreneur. The general duties to calculate taxes, file returns and pay, set out in Articles 36, 38 and 300 of the Code, apply to them.

Check your rate, income limit and eligibility for Group 3

Under Clause 293.3 of the Tax Code, a Group 3 entrepreneur uses one of two main rates: 3% of income with value-added tax (VAT) or 5% of income without separately paying VAT under this regime. A taxpayer using the 3% rate has separate VAT obligations, so the quarterly single-tax return does not cover all of their tax reporting. For entrepreneurs who produce, supply or sell jewellery and household items made of precious metals, precious stones, stones of organic origin and semi-precious stones, Clause 293.3 provides for a 5% rate.

The annual Group 3 income limit is 1,167 times the minimum wage set by law on January 1 of the reporting year. To calculate your limit in hryvnias, take the relevant figure from the Law on the State Budget of Ukraine for the applicable budget period and multiply it by 1,167. Track your cumulative income from the start of the year each month so you can see in advance when you are approaching the limit.

A Group 3 entrepreneur may hire any number of employees. Under Clause 291.6, payment for shipped goods, completed work and services provided must be made exclusively in cash or non-cash form, including electronic money. For income received through another form of settlement, Clause 293.4 sets a 15% rate, while Subparagraph 298.2.3 requires a move to the general tax system from the first day of the month after the reporting period in which the entrepreneur used that form of settlement.

Group 3 also has restrictions on business activities. If an entrepreneur carries out an activity that is not eligible for the simplified tax system, income from it is taxed at 15% under Subparagraph 4 of Clause 293.4. Under Subparagraph 5 of Subparagraph 298.2.3, the entrepreneur must move to the general tax system from the first day of the month after the reporting period in which that activity took place.

For example, Clause 291.5 prohibits security services and, in general, transactions involving excisable goods, but provides specific exceptions: retail sales of fuel and lubricants in containers of up to 20 litres, and retail sales by individuals of beer, cider, perry without added alcohol, and table wine. Before adding a new product range, check the restrictions in Article 291 and make sure the relevant business activity appears in your entry in the register of single-tax payers.

Subparagraph 7 of Subparagraph 298.2.3 requires a Group 3 entrepreneur to move to the general tax system from the first day of the month after the reporting period in which they carried out an activity not listed in this register.

If a FOP exceeds the annual income limit, the amount above the limit is subject to the 15% single-tax rate. The entrepreneur must move to the general tax system from the first day of the month after the quarter in which the limit was exceeded and file an application by the 20th day of the month following that quarter. These consequences are set out in Clauses 293.8 and 298.2.3. A service’s basic calculation of 5% of receipts will not account for them unless the correct input data has been established.

How to determine income from all sales channels

Under Article 292 of the Tax Code, a FOP calculates income based on business funds received in cash and non-cash form, subject to the exceptions set out in that Article. Under Clause 292.3, income includes the value of goods, work and services received under written agreements that do not provide for compensation of their value or their return. This rule also covers goods received for safekeeping and used by the entrepreneur.

Under Clause 292.6, income from goods, work or services received free of charge is recorded on the date the acceptance and transfer certificate is signed. If a FOP is a VAT payer, they also include accounts payable for which the limitation period has expired, on the date they are written off. If an entrepreneur provides intermediary services as an authorised representative under a mandate agreement, commission agent, freight forwarder or agent under the relevant agreement, their income under Clause 292.4 is the fee received.

An entrepreneur who instructs an intermediary to sell their own goods cannot, on that basis, limit their income to the intermediary’s fee. Before adding up receipts, check your role under the agreement. For monetary income, the general rule ties income to the date the funds are received. The balance in a bank account does not show the tax base: the entrepreneur may already have spent the proceeds on stock, rent or other needs.

The Group 3 single tax is calculated on income; the cost of purchasing goods and running a shop does not reduce it. For VAT payers, VAT amounts are excluded from income under Clause 292.11. Income in foreign currency is converted into hryvnias at the official exchange rate of the National Bank of Ukraine on the date it is received.

Bring receipts together in one set of records

A practical approach is to keep a spreadsheet with the date, document, amount, payment channel and a note on whether the transaction is included in income. At the end of each month, reconcile it as follows:

1. Collect statements from all business accounts, records of cash revenue, and reports from services customers use to pay for orders.
2. Match card payments and transfers from payment services to sales. Mark entries that refer to the same payment so you do not count it twice.
3. Check the customer’s full payment amount and list intermediary fees separately. Do not automatically reduce income by the fee just because a smaller amount reached your account.
4. Separate refunds, loans, transfers between your own accounts and other receipts that need documentary explanation.
5. Total income for the month, quarter and year to date. Compare the annual total with the Group 3 limit.

For taxpayers who are not VAT payers, Clause 296.1 allows income to be recorded in any format, with monthly totals. VAT payers keep income and expense records using the prescribed standard form. A detailed transaction spreadsheet helps you check monthly totals and explain differences with your bank statement.

Document receipts you exclude from income

Article 292 lists specific exclusions. For example, loan amounts are excluded from income. Repayable financial assistance is excluded if it is received and returned within 12 calendar months. Under Subparagraph 5 of Clause 292.11, money returned to a customer is excluded if the refund is due to returned goods, termination of an agreement or a written refund request. Keep the agreement, request, payment documents and records linking the refund to the original payment.

Mark transfers between your own accounts or deposits of your own funds separately for review. The words “own funds” in a payment reference are not, by themselves, enough to support an exclusion. Prepare documents showing where the money came from and whether the proceeds had already been recorded. For an unclear deposit or loan, check the terms of your specific transaction with an accountant who works with Group 3 entrepreneurs.

Illustrative example. A shop receives UAH 240,000 in taxable income through a bank and UAH 60,000 in cash during a quarter. Total income is UAH 300,000. At the 5% rate, the single tax is UAH 15,000; at the 1% rate, the military levy is UAH 3,000. Together, these two payments total UAH 18,000; SSC is calculated separately. This example assumes there is no income-limit overage, special exemption or transaction that changes the tax base.

Schedule reporting and each payment separately

Returns are prepared cumulatively: for the first quarter, first half of the year, first nine months and full year. So the half-year return includes income from the start of the year, while the current tax liability is calculated with previous assessments taken into account. This procedure is set out in Articles 294–296 of the Tax Code.

If the last day for filing a return falls on a weekend or public holiday, Clause 49.20 moves it to the next business day. For the single tax and military levy, count 10 calendar days after the end of the 40-day filing period for the quarterly return. Moving the filing deadline because of a weekend or holiday does not add days to this payment deadline.

If the final payment day itself falls on a weekend or public holiday, Clause 57.1 moves it to the next business day. Filing the return early does not start a new 10-day payment period. Use a separate calendar for SSC; in practice, it is safer to schedule payment before the 20th and avoid leaving it until the last day.

If there were no sales during the quarter, check whether there are still figures to report. Under Clause 49.2, a return is filed when there are taxable items or figures to report. For example, later quarters may still include year-to-date income figures, while the annual return may include SSC information.

Military levy: account for the 1% rate and the rule’s term

For the standard Group 3 regime, the military levy is 1% of income determined under Article 292 of the Tax Code. It is reported in the single-tax payer return and paid quarterly. It is a separate payment, so paying the single tax does not, by itself, settle the military levy.

Clause 16-1 of Subsection 10 of Section XX of the Tax Code imposes this obligation on single-tax payers until December 31 of the third calendar year following the year in which martial law is terminated or lifted. When checking your obligations for a particular reporting year, account for the entire period set by law. Do not apply military levy relief for Groups 1 and 2, including relief during leave, to Group 3.

SSC: check assessments and exemptions month by month

As a general rule, an entrepreneur on the simplified tax system determines their own SSC base within the statutory maximum, and the contribution must be at least the minimum insurance contribution. The rate for yourself is 22%. To calculate the minimum contribution, use the minimum wage for the relevant month and check the provisions of the Law on the State Budget of Ukraine for the relevant period. Having no revenue does not, by itself, exempt an entrepreneur on the simplified tax system from SSC.

Do not rely on the general wartime right to skip SSC payments without checking the budget law. Law No. 4695-IX suspends the effect of Clause 9-19 of Section VIII of the SSC Law for the budget period it specifies. This suspension applies specifically to Clause 9-19; it does not automatically cancel other grounds for exemption. For a different budget period, check the relevant law instead of applying this rule indefinitely.

How to apply an exemption during military service

The exemptions below under Clause 25 of the Tax Code and Clauses 9-2 and 9-18 of Law No. 2464-VI apply to the types of military service defined by those provisions during a special period under Ukraine’s Law “On Mobilisation Preparation and Mobilisation.” The fact that someone is serving in any capacity is not enough: check the type of service in your documents.

Under Clause 25 of Subsection 10 of Section XX of the Tax Code, an entrepreneur is exempt from calculating and paying the single tax and military levy for themselves, and from filing returns for them, if called up for military service during mobilisation, assigned to perform mobilisation duties in a position provided for by wartime staffing, or accepted for military service under contract. The exemption covers the period from the first day of the month of mobilisation or contract signing through the last day of the month of demobilisation or discharge from service. It applies whether or not the entrepreneur has employees.

Clause 9-2 of Section VIII of Law No. 2464-VI exempts an entrepreneur who is not an employer from SSC payer duties for the full period of military service if they were called up during mobilisation, assigned to perform mobilisation duties in a position provided for by wartime staffing, or serve under contract. An entrepreneur with employees therefore cannot automatically use this exemption. For entrepreneurs called up from among reservists during a special period, Clause 9-18 of this Section provides a corresponding exemption if they are not employers.

The DPS applies the exemption based on information from the Unified State Register of Conscripts, Persons Liable for Military Service and Reservists. Check whether the DPS has accounted for your service start and end dates. If the information is missing or the DPS has not received it, submit an application and copies of supporting documents to your supervisory authority: a military ID or other government document confirming the call-up, or a contract for contract service.

After the documents are processed, check the assessments again. If, during military service, the DPS cancelled your single-tax payer registration because of tax debt under Subparagraph 8 of Subparagraph 298.2.3, check whether it has been restored: Clause 25 requires the DPS to reinstate registration from the date it was cancelled. If it has not been restored in the records, contact the DPS citing this provision and provide service documents.

If an entrepreneur called up for military service during mobilisation or serving under contract authorises another person to pay employees’ wages for the duration of that service, the authorised person calculates and withholds personal income tax and military levy from the payments. Subject to Clause 25, after discharge the entrepreneur has 180 calendar days to pay these amounts and 150 calendar days to file the relevant returns, without the penalties specified in that Clause.

For SSC on employee payments, Clause 9-2 provides for the authorised person to fulfil the duties if the entrepreneur was called up during mobilisation, and Clause 9-18 does so if the entrepreneur was called up from among reservists during a special period. In these cases, after demobilisation or discharge, the entrepreneur has 180 calendar days to pay and 150 calendar days to file. Contract service alone is not enough to apply these specific provisions on employee payments.

Under Clause 9-18, the payment period starts on the day after discharge.

An exemption during service does not automatically cancel obligations that arose earlier. At the same time, Clause 9-2 of Section VIII of Law No. 2464-VI suspends the application of Article 25 of that Law for the full period of the military service it defines, while Clause 9-18 provides for enforcement and collection measures under that Article not to apply to reservists called up for service.

These provisions also apply to entrepreneurs who are employers. If the DPS has applied such measures, contact it to check the service information and application of the relevant provision. Subject to its conditions, Clause 25 allows tax obligations that fell overdue because of service to be fulfilled within 180 calendar days after discharge or completion of treatment or rehabilitation, with relief from liability. For SSC duties that an entrepreneur missed due to mobilisation or contract military service, Clauses 9-2 and 9-18 provide relief from liability for failing to file the relevant returns and pay the contribution.

To qualify, the entrepreneur must file within 150 calendar days and pay within 180 calendar days of demobilisation or discharge, or, after treatment or rehabilitation, of its completion. Clause 9-18 expressly names mobilisation and contract service for this rule on overdue obligations. Being called up from among reservists alone does not automatically justify applying it to earlier debts. Keep service and treatment documents to substantiate eligibility and the relevant dates.

Separate SSC exemptions are provided for entrepreneurs whose place of residence is in a temporarily occupied territory of Ukraine and entrepreneurs for whom deprivation of personal liberty as a result of armed aggression against Ukraine has been officially established.

Under Clause 9-3 of Section VIII of Law No. 2464-VI, during the special legal regime defined by Ukraine’s Law “On Ensuring the Rights and Freedoms of Citizens and the Legal Regime in the Temporarily Occupied Territory of Ukraine,” payers whose place of residence is in such territory are exempt from the duties set out in Article 6 of the SSC Law. If this applies to you, check the place of residence recorded for you by the DPS and whether the exemption has been applied.

Under Clause 9-8 of this Section, an entrepreneur who is not an employer and whose deprivation of personal liberty as a result of armed aggression against Ukraine has been established under law is exempt from payer duties and from paying arrears, late payment interest and penalties for non-payment throughout the period of deprivation of liberty and for six months after release. The exemption is applied based on an application by a family member or by the payer after release or completion of treatment or rehabilitation.

The payer must submit the application within 90 days after release or, if they received treatment or rehabilitation afterward, within 90 days after it ends. The duration of treatment or rehabilitation must be confirmed by a certificate or discharge summary from the relevant institution.

Before calculating the quarterly contribution, also check the following:

• Your employer pays the contribution for you. Part 6 of Article 4 exempts you from SSC for yourself for months in which your employer paid at least the minimum insurance contribution. Check the amount actually paid for each month. If it is lower, this provision allows you to determine a base yourself with a contribution no lower than the minimum; do not automatically calculate your payment as the difference between the two amounts.
• You receive a pension or have a disability. Part 4 of Article 4 provides an exemption for recipients of an old-age or service pension, persons with disabilities, and people who have reached the statutory pension age and receive a pension or social assistance. These categories may contribute for themselves voluntarily.

A practical approach is to list each month of the year and note the base, contribution and documentary grounds for exemption beside it. Use this list to check quarterly payments and the annual SSC appendix. If an exemption starts partway through the year, do not apply it to earlier months without checking. Information about your own SSC is submitted as part of the fourth-quarter return under the rules for your taxpayer category; annual reporting does not defer quarterly payment.

How to use a bank service and the Electronic Cabinet

Before connecting a bank service, read its agreement and service description. Find out whether it only displays reminders, prepares calculations, creates payments, prepares a return, or also submits it to the DPS. Separately check which accounts and income channels it covers, who signs the document, how receipts are delivered, and what happens if there are insufficient funds or a technical failure.

Under Articles 36 and 300 of the Tax Code, the entrepreneur is responsible for correct calculations and timely filing and payment, except where the law expressly provides otherwise. Agree with the bank or accountant on who prepares the documents, who checks them, who submits them and who monitors the result. If a service performs an action automatically at your instruction, still check the input data and completion confirmations yourself.

For electronic filing, prepare a valid qualified electronic signature (QES) or another signature permitted by law. Article 42 allows electronic document exchange with the DPS without a separate agreement for it. If you have applied to receive documents through the Electronic Cabinet, check incoming documents regularly: their delivery can have legal consequences regardless of when you read an email notification.

File the return and confirm it was accepted

1. Prepare the totals. Reconcile income from all channels, your rate, military levy and previous assessments. For the annual return, check the SSC information.
2. Select the correct document and period. Make sure it is the single-tax payer return for a natural person entrepreneur and that the year and period match your records. When filing your tax report, select the reporting return type («Звітна») rather than the informational return type («Довідкова»).
3. Check the details. Verify your tax number, name, tax address, supervisory authority, return type and appendices.
4. Review the final calculation. Compare the document with your records, sign it and submit it early enough to leave time to fix a technical error.
5. Read the receipts. Confirm that you have proof that the DPS accepted the return. A service message saying it was sent does not confirm the result of processing.
6. Save the evidence. Download the submitted document, appendices and receipts into one folder for the relevant period.

Under Article 49, acceptance of a return is confirmed by the corresponding receipt. If you receive a rejection, read the reason, correct the details, format or signature issue, and submit it again. Rejection does not extend the payment deadline: under Clause 49.16 of the Tax Code, the entrepreneur must pay on time the tax liability they calculated in that return. After acceptance, also check your own calculations: when accepting a return, the DPS checks mandatory details but does not confirm that every amount is correct.

Make the payments and check how they are recorded

1. Check the current payment details for your place of registration and for each payment. The single tax, military levy and SSC have different purposes.
2. Compare the amount due with the return, previous payments, overpayment and debt. Do not reduce a payment just because there is a general overpayment for another tax.
3. Create the payment, check the recipient, account, payer details and amount, then confirm it.
4. Make sure the bank processed the payment. Save the payment document and statement showing the funds were debited.
5. Once the transaction appears in the Electronic Cabinet, check “Стан розрахунків з бюджетом” (“Budget account status”) for each payment. Compare assessments, credited payments, overpayments and any remaining debt.

Filing a return and making a payment are separate actions. An accepted return does not mean the bank transferred the money, and a completed payment does not replace the return. For SSC, Part 10 of Article 9 of Law No. 2464-VI defines the payment date for a bank transfer as the day the funds are debited from the payer’s account for transfer to the proper account. So keep the bank document even if the entry has not yet appeared in the tax account.

What to do about an error, overpayment or uncredited payment

Error in a return before the filing deadline. Submit a return marked “Звітна нова” (“New reporting return”) for the same period with the correct figures and check that it is accepted. Clause 50.1 provides that the penalties specified in that Clause do not apply when the correction is made before the filing deadline.

Error after the filing deadline. Article 50 provides for an amended calculation or a correction in a subsequent return under the prescribed rules. If the error understated your tax liability, determine the underpaid amount. If correcting through an amended return, Clause 50.1 requires you to pay the underpayment before filing it. If correcting in a subsequent return, include the underpayment in that return’s total liability. Under the general rule in Clause 50.1, the entrepreneur pays a penalty of 3% of the underpayment before filing an amended return, or adds a 5% penalty to an underpayment corrected in a subsequent return. However, Subparagraph 69.38 of Subsection 10 of Section XX of the Tax Code waives these penalties and late payment interest when a taxpayer makes a correction voluntarily before martial law in Ukraine is terminated or lifted, provided they comply with the procedure, requirements and restrictions in Article 50. This relief does not cancel the underpayment: pay it under the correction method you choose. During a scheduled or unscheduled documentary audit, including an extension, suspension or postponement of its timing, Clause 50.2 prohibits filing amended returns for the relevant tax or levy for the period under audit. In that situation, involve an accountant in choosing a correction method and prepare the original return, receipts and correct calculation.

Payment is not visible or went to another account. Compare the bank document with the current payment details and payer information. Contact the bank about processing the transfer and the DPS about how it was recorded. Do not consider the matter resolved until you have established which obligation was settled and whether any debt remains for the required payment.

You have an overpayment. Under Clause 87.1, an overpayment of the same tax can cover its liability without an application. To direct funds mistakenly or excessively paid under a different tax to another obligation, you need to submit an application. If you have tax debt, take into account the repayment priority set out in Clause 87.9: the stated purpose of a new payment does not always determine which obligation is settled first.

You need a tax refund. Article 43 provides for an application stating how the funds should be returned. As a general rule, it must be filed within 1,095 days of the mistaken or excessive payment. A refund to a bank account when tax debt exists is possible only after the debt has been fully paid. SSC follows the separate procedure in Part 13 of Article 9 of Law No. 2464-VI; check its overpayment separately from tax overpayments.

To explain a discrepancy more quickly, prepare one set of documents: income records, the return and receipt, payment document, bank statement and DPS account information. This set will help establish whether the return, payment or payment-credit record needs to be corrected.

Official provisions to check for your obligations

• Tax Code of Ukraine No. 2755-VI: Articles 36, 38 and 300 — duties and liability; Articles 42 and 49 — electronic documents and return acceptance; Articles 50 and 57 — corrections and payment deadlines; Articles 43 and 87 — overpayments and refunds; Articles 291–296 and 298 — Group 3 conditions, income, rates, reporting and transition; Clause 16-1 of Subsection 10 of Section XX — military levy.
• Law of Ukraine “On Collection and Accounting of the Single Contribution for Mandatory State Social Insurance” No. 2464-VI: Articles 4, 7–9 — payers, exemptions, base, rate and payment; Section VIII — special provisions.
• Law of Ukraine on the State Budget No. 4695-IX: Clause 3 of the Final Provisions — suspension of Clause 9-19 of Section VIII of the SSC Law for the specified budget period.
• Draft Law No. 8226 record — check the progress of the proposal for a special regime for certain Group 3 taxpayers.