Freelancers need to declare income received via Solar Staff on their own, because our service is not a tax agent and does not pay their tax on such income (as per Article 163.1 of the Tax Code of Ukraine).
To carry on tax accounting in Ukraine for your Solar Staff income, you need to:
Ukraine's residents are taxed on their worldwide income, while non-residents are taxed only on their Ukrainian-source income.
An individual is regarded as resident in Ukraine in any of the following cases:
The individual has their place of abode in Ukraine. When an individual has a place of abode in another country as well, such an individual is deemed to be a resident of Ukraine if they have a permanent place of abode (domicile) in Ukraine.
The individual has their center of vital and economic interests in Ukraine.
The individual stays in Ukraine at least 183 days during the tax year (calendar year), including the days of arrival and departure.
The individual is registered as a private entrepreneur in Ukraine.
Tax identification number
In order to interact with state authorities and pay taxes, the freelancer needs to obtain a registration number of the taxpayer’s account card (реєстраційний номер облікової картки платника податків, or РНОКПП/RNOKPP; formerly called "individual tax number"). You can obtain the taxpayer registration number online or in person at an office of the State Tax Service of Ukraine (Державна податкова служба України) by submitting an application and identity documents. The registration number consists of 10 digits and is assigned within 3 days after the submission of documents.
The private entrepreneur (фізична особа — підприємець / ФОП, "individual-entrepreneur") has the same 10-digit taxpayer registration number as RNOKPP. However, starting from March 9, 2020, if a private entrepreneur obtains a RNOKPP and is at the same time registered as a VAT payer, then their taxpayer registration number (RNOKPP) will consist of 12 digits.
Taxes and contributions payable by freelancers
Tax obligations depend on the freelancer's status and/or fulfillment of certain conditions. Ukraine has 2 tax statuses for Solar Staff users to choose from:
Read on for more details.
Individuals are liable to pay the following taxes and contributions:
Income tax at the rate of 18%. This rate applies to income arising from independent professional activities in the course of a calendar year.
Tax accounting and payment. Each year, taxpayers submit an income tax return (ПОДАТКОВА ДЕКЛАРАЦІЯ ПРО МАЙНОВИЙ СТАН І ДОХОДИ) in paper form, which they do in person / by proxy / via mail, or in electronic form (in the taxpayer's e-cabinet using an electronic signature) until May 1 of the year following the reporting one (the individual is to fill out only the main section of the return). The tax calculated based on the return is payable before August 1. Individuals don't have to do any additional tax accounting. In your tax return, please specify the following as your income source: TMS SolarWeb Limited Reg. No. HE 329931 VAT No. 99000193F. Income amounts are indicated in line 10.7 "Income received from sources outside Ukraine" (Доходи, отримані з джерел за межами України).
Military tax at the rate of 1.5%, which is levied on the income amount indicated in the income tax return. The military tax is included in the income tax return and paid together with the main tax before August 1 of the year following the reporting one. There is no separate accounting for the military tax.
To carry on business as a private entrepreneur, the taxpayer needs to register online (learn more), specifying a tax regime in their application.
In Ukraine, private entrepreneurs can receive income via Solar Staff under the following tax regimes:
General tax system
The general tax system (загальна система) has no restrictions on private entrepreneurs' types of activities, number of employees, and annual turnover. If the private entrepreneur does not select a tax system during registration, the general one is chosen by default.
Under the general tax system, the taxpayer is liable for:
Income tax at the rate of 18%. The amount of expenses related to entrepreneurial activity can be deducted from the amount of income received (Article 177 of the Tax Code of Ukraine).
Tax accounting and payment. Both individuals and private entrepreneurs use the same tax return form (ПОДАТКОВА ДЕКЛАРАЦІЯ ПРО МАЙНОВИЙ СТАН І ДОХОДИ), but private entrepreneurs additionally need to fill out its F2 appendix. Private entrepreneurs also need to make advance payments before the 19th day of the month following the quarter (before April 19, July 19, and October 19). There is no separate Q4 advance payment, because it is included in the final calculation of the income tax for the year.
Military tax (the payment and accounting procedures are the same as for the individual).
Unified social contributions (USCs), which are payable at the rate of 22% of the private entrepreneur's net profit, but not less than 22% of the minimal monthly salary.
Accounting and payment. USCs are paid on a quarterly basis before the 20th day of the month following the reporting quarter. USCs are to be filed by February 10 of the year following the reporting year by submitting table No. 1 of the D5 report (таблица № 1 звіт Д5).
VAT (податок на додану вартість, ПДВ). If revenue from your activities over the past 12 months exceeds UAH 1 million, you must register as a VAT payer. If the revenue threshold is not exceeded, registration is optional. To register for VAT, you need to submit an application to the tax authorities via the taxpayer's e-cabinet (the application form can be found in Appendix 1 to Regulation No. 1130). If the income threshold is exceeded, the application must be submitted within 10 days after the end of the month when the excess occurred. In case of voluntary registration, the application for VAT registration is submitted no later than 20 calendar days before the beginning of the taxpayer's first tax period as a VAT payer.
The VAT rate is 20% (specific transactions are subject to 14%, 7%, and 0%).
Tax accounting and payment. VAT returns are filed on a monthly basis in electronic form. Monthly tax returns are due within 20 calendar days following the end of the reporting month. The tax is due within 10 calendar days following the deadline for filing the relevant tax returns. To learn more about filling out and filing the return, see here. In addition, private entrepreneurs need to issue VAT invoices for all transactions (learn more here).
Simplified (unified) tax system (спрощена система оподаткування, ССО)
The taxpayer can opt for this regime when registering as a private entrepreneur, or post-registration through their taxpayer's account, but no later than 15 calendar days before the beginning of the next calendar quarter (learn more).
The simplified tax system includes income tax, unified social contributions, and voluntary VAT (private entrepreneurs under the simplified tax regime are not subject to compulsory VAT registration requirements). Private entrepreneurs are also required to keep records of their income and expenditures. See here for more.
For the purposes of the simplified tax system, private entrepreneurs are divided into three groups based on their activities:
Group 1: Retail sales of goods, household services.
Group 2: Services (including household services), manufacturing and/or sale of goods, restaurant industry (services/goods are only rendered/sold to individuals).
Group 3: Any activities eligible for the simplified tax system (Article 291.5.1 of the Tax Code of Ukraine).
Limits. In order to apply the simplified tax regime (group 3), the private entrepreneur's annual income must not exceed 1,167 minimal salaries (UAH 7,818,900 as at 2023).
Private entrepreneurs under the simplified tax regime are subject to the following taxes:
Income tax at the rate of 5%. If the private entrepreneur is registered as a VAT payer, the income tax rate is reduced to 3%. The tax is calculated on the basis of the private entrepreneur's income (expenses associated with entrepreneurial activities are non-deductible). Private entrepreneurs who are not VAT payers currently enjoy a reduced tax rate of 2% (learn more here).
Tax accounting and payment. Private entrepreneurs under the simplified tax system submit the unified tax return quarterly (in person, by mail, or online), within 40 calendar days following the quarter of income (in other words, the return is submitted four times a year). The unified tax is paid on a quarterly basis, within 50 calendar days following the end of the quarter. The unified tax return is filled out the same way as under the general tax system.
VAT (same as under the general tax system).
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].