Main points
- Individual entrepreneurs who change their single tax group during the year must take into account the total income from the beginning of the year without “resetting” the limit.
- If the income exceeds the limit of the group to which the entrepreneur has transferred, he loses the right to “simplification” and must pay a tax of 15% on the amount of the excess.
When can an individual entrepreneur be deprived of “simplified” benefits / Depositphotos
Individual entrepreneurs who change their single tax group during the year often make one mistake. This can lead to the loss of the right to the simplified taxation system.
Does the income limit “reset” after changing group?
If an individual entrepreneur moves from one single tax group to another in the middle of the year, there is no new start. The income counter is not reset, writes YANKIV.
The tax office looks at income for the entire calendar year – from January 1 to December 31. And it doesn't matter how many times you changed groups during this time.
This means that if you started the year in the first group, then moved to the second, and finished in the third group, your total income for the year should not exceed 10,091,049 hryvnias — the limit for the third group.
What limit should be taken into account?
You need to focus on the annual limit of the group you are in after the transition.
That is, the scheme is as follows:
- you count all income from the beginning of the year;
- take the limit of the new group;
- compare the total amount with this limit.
The limit is not divided into months, it is set for the entire calendar year. To understand this, let's look at an example:
The income limits for 2025 were: the first group – 1,334,438 hryvnias per year, the second group – 6,672,190 hryvnias per year. An entrepreneur, working in the first group from January to June, has already used 100 thousand hryvnias from his total limit. After moving to the second group from July 1 to the end of December, he can earn not 6,672,190 hryvnias, but 6,572,190 hryvnias, since 100 thousand hryvnias are already included as part of his annual income,
– the editorial office writes.
When can you lose the right to “simplified”?
If an entrepreneur makes a mistake in his calculations and exceeds the permitted limit for his group, he loses the right to work on the simplified system from the quarter in which the excess occurred.
What to do in this case?
- For individual entrepreneurs of group 1: if income exceeds the limit, the entrepreneur must either change his status to group 2 or 3, or completely exit the simplified system.
- For individual entrepreneurs of group 2: the same logic applies – it is necessary to switch to group 3 of the single tax or completely abandon the simplified system.
- For individual entrepreneurs of group 3: when income exceeds the permitted limit, a rate of 15% is applied to the amount exceeding the limit plus a mandatory change of the taxation system to the general one.
Please note: In all cases, tax is charged at a rate of 15% on the portion of income exceeding the limit.