Main points
- Individual entrepreneurs on the simplified taxation system must follow annual income limits, which differ for each group.
- Exceeding the income limit results in a 15% excess tax, which can be transferred to another group or the general system.
What sole proprietors should know about the income limit and how to calculate it / Unsplash
Individual entrepreneurs working on the simplified system should carefully monitor their income, as it depends on the group. If you exceed the limit, you may be deprived of the “simplified” system and fined.
What are the limits for sole proprietors in Ukraine?
Clear annual limits have been established for each group of the single tax, writes “News. LIVE”.
According to the rules of the Tax Code, the following income thresholds apply in 2026:
- Individual entrepreneurs of group 1 – up to 1,444,049 hryvnias per year;
- Individual entrepreneurs of group 2 – up to 7,211,598 hryvnias;
- Individual entrepreneurs of group 3 – up to 10,091,049 hryvnias.
If an entrepreneur earns more than allowed, they will have to pay 15% tax on the excess amount. In addition, individual entrepreneurs can transfer to another group or to the general taxation system altogether.
What mistake can cost a sole proprietor money?
Many entrepreneurs are sure that if they switch to a different single tax group during the year, the income limit supposedly starts “from scratch.” But this is not so.
For example, an entrepreneur has been working in Group 1 since the beginning of the year, and in April decided to move to Group 2 to expand his activities. This does not mean that he can earn the full limit of Group 2 from the new quarter.
In fact, all income for the year is summed up, regardless of which group the individual entrepreneur was in at different periods.
When submitting a declaration, an individual entrepreneur is required to indicate all income for the year, summing up earnings for all months and for all groups he worked in. The main rule is that the final amount should not exceed the limit of the group in which the entrepreneur was as of December 31.
What do you need to know about registering and maintaining a sole proprietorship in Ukraine?
-
Individual entrepreneurs who have lost their businesses due to the war can apply for compensation through the new application category A3.5 on the Diya portal. Applications will be reviewed and considered by the compensation commission to determine the possible amount of payments.
-
You can register an individual entrepreneur online through the Diya portal, and completing the application will take up to 10 minutes of your time. The service is free; when filling out the form, the future entrepreneur must select the individual economic activity and the type of taxation.
-
Ukrainian entrepreneurs can change their individual entrepreneur group online through “Diya” or offline through the Central Administrative Center. An application to change the individual entrepreneur group must be submitted no later than 10 calendar days before the start of the new quarter.
-
Veterans and people with disabilities as a result of war can receive up to 1 million hryvnia in grants from the state for business. The next stage of accepting applications will last until March 22; decisions are made after assessing the business plan, interviewing, and checking the business reputation at an authorized bank.