Ua Formation

Ukraine Business Formation (Реєстрація ФОП / ТОВ) — Self-Employed Skill v1.0

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

This skill covers how a self-employed person sets up a business in Ukraine: registering as a ФОП (фізична особа-підприємець / sole proprietor), choosing КВЕД activity codes and a tax system at registration, the VAT (ПДВ) threshold, ЄСВ registration, opening a bank account, and the decision between a ФОП and a ТОВ (товариство з обмеженою відповідальністю / LLC). It is the entry point. Once formed, route ongoing work to the companion skills: ua-single-tax, ua-income-tax, ua-social-contributions, ua-bookkeeping, and ukraine-vat.

Section 1 — Quick Reference

Wartime note (martial law): Figures below are as of 1 January 2026. Single-tax fixed amounts and the ЄСВ minimum are pinned at their 1-Jan values for the whole year and do not change mid-year. The elevated 5% military levy (військовий збір) on wages and the 1% military levy on Group 3 income remain in force under martial law. (Verify current procedure — wartime rules change frequently.)

Conservative defaults

When information is missing, default to the safer (more conservative) assumption and flag it:

1. Default to Group 3 (5%) for a freelancer / IT contractor / online business unless the client confirms they only serve Ukrainian consumers and want the lowest fixed cost. Group 3 is the only group that may invoice foreign clients and legal entities without restriction. Do not assume Group 1 or 2 eligibility.
2. Assume the single-tax election is NOT automatic. A ФОП registered without a timely election lands on the general system (загальна система) by default. Always confirm the election was filed.
3. Assume VAT registration is required once taxable turnover crosses ₴1,000,000 in any rolling 12 months — even for a ФОП — unless the client is a single-tax payer for whom the threshold-based mandatory rule is disapplied (single-tax payers register for VAT only when they opt into the 3% Group 3 rate or voluntarily). (Verify current procedure.)
4. Assume ЄСВ is due at the minimum monthly amount unless a documented exemption applies (age/length-of-service pensioner, or person with disability receiving the corresponding pension/assistance).
5. Never confirm a КВЕД code is "allowed on single tax" from memory — check the barred- activities list (see ua-single-tax) and flag for reviewer confirmation.
6. Treat all amounts and deadlines as "verify current value/procedure" before relying on them for a filing. Defer the final call to a qualified Ukrainian accountant.

Section 2 — ФОП registration, step by step

A ФОП is not a separate legal entity — it is an individual who has acquired the status of entrepreneur. There is no charter capital, and the individual is personally liable for business debts with their personal assets. State registration of a ФОП is free of charge.

2.1 Choose your registration channel

2.2 Documents / information needed

• Ukrainian passport / ID card (or a valid passport shown via the Diia app v2.0+); foreign nationals: passport with a notarised Ukrainian translation plus a residence document.
• РНОКПП (реєстраційний номер облікової картки платника податків — taxpayer ID number, the "tax number"), or УНЗР (the 13-digit unique record number on the ID card).
• Registered address (місце проживання) — used as the ФОП's address.
• Chosen КВЕД codes (see 2.3).
• Chosen tax system and, if simplified, the single-tax group (see Section 3).
• For Diia: an active BankID, Diia.Signature, or QES (КЕП).

2.3 Choose КВЕД activity codes

• КВЕД = Класифікатор видів економічної діяльності (the activity classifier). The current edition is КВЕД-2010 (ДК 009:2010). A migration to NACE 2.1-UA is planned for 1 January 2027 — until then КВЕД-2010 applies. (Verify current value.)
• You may register as many codes as you like, but exactly one must be the primary (основний) code — the one generating the most income. Practitioners typically register 5–7 codes up front to avoid filing changes later.
• Critical for single-tax eligibility: your codes must not fall under the barred activities list for the simplified system (e.g. excise goods production/trade, gambling, currency exchange, mining of precious metals/stones, certain financial intermediation). See ua-single-tax for the full list. A barred КВЕД blocks single-tax registration.
• Common freelancer/IT examples (verify the exact code matches the work): 62.01 Computer programming; 62.02 Computer consultancy; 63.11 Data processing/hosting; 70.22 Business and management consulting; 73.11 Advertising agencies.

2.4 Elect the tax system at registration

• The single-tax election is filed via the заява про обрання спрощеної системи оподаткування (application to choose the simplified system). On Diia it is submitted together with the ФОП registration application.
• Timing rule: if the election is filed within 10 days of state registration, the ФОП is treated as a single-tax payer from the date of registration (for Group 3 and the general rule; for Groups 1/2 the simplified status starts from the first day of the following month). Miss this window and you sit on the general system until you can switch from the start of a future quarter. (Verify current procedure.)
• Switching later: to move onto / between single-tax groups afterwards, file the application no later than 15 calendar days before the start of the next quarter; the new status takes effect from that quarter's first day.
• If you take no action, you default to the general system (загальна система — 18% personal income tax + 5% military levy on net profit; see ua-income-tax).

2.5 ЄСВ (unified social contribution) registration

• Registration as an ЄСВ payer is automatic on ФОП registration — the State Tax Service picks it up from the ЄДР; no separate ЄСВ application is normally required.
• ЄСВ is 22% of the minimum wage, i.e. a minimum of ₴1,902.34/month in 2026 (≈ ₴5,707.02/quarter), payable regardless of income and even if there was no income that month, unless an exemption applies. (Verify current value.)
• Exemptions: age/length-of-service pensioners, and persons with disability who actually receive the corresponding pension or social assistance, may be exempt from ЄСВ.
• From 2026 ФОПs file a unified quarterly report (ЄСВ + PIT/military levy) instead of monthly reporting. See ua-social-contributions.

2.6 Open a business bank account

• A ФОП should open a dedicated current account for business activity (підприємницький рахунок) — separate from any personal card. Single-tax receipts must flow through the business account.
• Opening is free at most banks (Privat24, Monobank, Oschadbank, Raiffeisen, etc.) and is often available online once the ФОП is in the ЄДР.
• Newly registered ФОПs face heightened financial monitoring in roughly the first 6 months — expect transfer limits and documentation requests. (Verify current procedure.)

2.7 What you receive

• An extract from the ЄДР (витяг з Єдиного державного реєстру) confirming the ФОП and КВЕД codes — downloadable from the Diia account/cabinet.
• Tax-payer registration with the ДПС and, if elected, single-tax status from the relevant start date.

2.8 Timing & cost summary

Section 3 — Choosing the tax system at formation (decision table)

(All amounts: verify current value before relying on them.)

Default routing logic:

• Foreign clients, IT/dev, B2B services, or expecting >₴7.2m → Group 3 (5%).
• Local services/production, only Ukrainian customers, ≤10 staff, predictable low cost → Group 2.
• Tiny local retail/household services, no employees → Group 1.
• Barred КВЕД, very high turnover, or VAT-recovery-heavy operations → general system (and likely VAT registration).

Detailed group rules, limits and barred activities live in ua-single-tax. General-system profit tax lives in ua-income-tax. ЄСВ lives in ua-social-contributions.

Section 4 — VAT (ПДВ) registration

• Mandatory threshold: taxable supplies exceeding ₴1,000,000 (excluding VAT) over the last rolling 12 months. The registration application must be filed no later than the 10th day of the month following the month the threshold was crossed.
• Single-tax payers are excluded from the turnover-based mandatory rule. A Group 1/2/3 ФОП on the non-VAT track does not auto-register for VAT just for crossing ₴1m; they become a VAT payer only by opting into the 3% Group 3 rate or registering voluntarily. A general-system business does hit the mandatory ₴1m rule. (Verify current procedure.)
• Standard VAT rate: 20% (reduced rates apply to specific supplies, e.g. certain pharmaceuticals/medical 7%, some agricultural 14%). (Verify current value.)
• Voluntary registration is available before the threshold — useful if your customers are VAT payers who want input-VAT credits, or you incur large input VAT you want to recover. Voluntary VAT for a freelancer is usually not worthwhile due to reporting and the electronic VAT administration system (СЕА ПДВ / electronic VAT account) overhead.
• Full mechanics, return preparation (Декларація з ПДВ) and the electronic VAT account are in ukraine-vat.

Section 5 — ФОП vs ТОВ comparison

When a ТОВ makes sense

• You have partners / co-founders or want to bring in investors / split equity.
• You need limited liability to ring-fence personal assets from business risk.
• Your turnover/headcount will exceed the Group 3 single-tax limit (₴10.09m / 2026) or your activity is barred from the simplified system.
• You plan to sell the business or build something institutional.

ТОВ on single tax (Group 3)

A ТОВ may itself elect the Group 3 single tax (5% non-VAT or 3% + VAT) instead of the 18% corporate income tax, if it meets Group 3 conditions (within the income limit, permitted activities, ≤25% owned by non-single-tax legal entities, etc.). This gives a small company a flat 5% turnover tax similar to a Group 3 ФОП — but the company still bears full accounting, and profit taken out as dividends is taxed again. So a Group 3 ФОП is usually cheaper for a true solo operator; a Group 3 ТОВ suits a small team that needs limited liability. (Verify current eligibility conditions.)

Section 6 — Worked examples

Illustrative only. Round figures; verify current values before filing.

Persona A — "Oksana", freelance web developer with foreign clients

Invoices US/EU clients ~₴1.2m/year. Foreign clients ⇒ must use Group 3 (Groups 1/2 cannot serve foreign or legal-entity clients). Registers ФОП via Diia, picks КВЕД 62.01, files the single-tax election within 10 days ⇒ Group 3 from registration date. Annual cost: 5% single tax + 1% military levy on income, plus ₴1,902.34/month ЄСВ. Stays below ₴1m? No — above — but single-tax payers are exempt from the turnover-based mandatory VAT rule, so no VAT registration needed unless she opts for the 3% track. Routing: ua-single-tax, ua-social-contributions.

Persona B — "Petro", local barber

Serves walk-in customers (the public) only, employs 2 people, ~₴900k/year. Eligible for Group 2 (services to population, ≤10 employees, within ₴7.21m limit). Fixed ₴1,729.40/month single tax + ₴864.70/month military levy + ₴1,902.34/month ЄСВ, regardless of monthly takings. Registers via Diia with КВЕД 96.02 (hairdressing). Routing: ua-single-tax.

Persona C — "Maria & Andrii", two co-founders launching a SaaS

Want limited liability, plan to raise investment and hire a team. A ФОП can't have co-owners ⇒ form a ТОВ with a charter and two participants. Elect Group 3 (5%) while under the ₴10.09m limit to keep tax simple; switch to 18% corporate tax if they outgrow it or need VAT recovery at scale. Note dividends to founders are taxed on distribution. Routing: this skill + a qualified accountant for the charter and accounting setup.

Persona D — "Ihor", IT contractor crossing into VAT territory

Group 3 ФОП billing one large Ukrainian VAT-paying client ~₴3m/year. As a non-VAT single-tax payer he is not forced to register for VAT by turnover. But his client wants input-VAT credits, so he considers voluntary VAT + the 3% Group 3 track. Trade-off: 3% + 20% VAT admin (СЕА ПДВ) vs 5% and no VAT. Routing: ukraine-vat + reviewer to model the net cost.

Section 7 — Tier 2 (escalate to a qualified Ukrainian accountant)

Stop and route to a credentialed Ukrainian accountant/lawyer when:

• The client is a foreign national / non-resident wanting to register a ФОП or ТОВ (residence, translation, immigration and tax-residency issues).
• КВЕД selection is ambiguous or may touch a barred activity (excise goods, gambling, financial services, precious metals, currency exchange).
• A ТОВ is involved — charter drafting, beneficial-ownership (UBO) declaration, charter capital, dividends.
• VAT registration, the electronic VAT account (СЕА ПДВ), or the 3% vs 5% decision.
• Mid-year switching between tax systems/groups, or retroactive corrections.
• ЄСВ exemption claims (pensioner / disability) or closure / liquidation.
• Anything under evolving martial-law rules where the procedure may have changed.

Section 8 — Reference + checklist

8.1 Closing / deregistering a ФОП (basics)

1. File for state deregistration (припинення підприємницької діяльності) via Diia or a state registrar — free, and the ЄДР record is updated quickly (often ~1 day).
2. Deregistration does NOT end tax obligations. You must still:
   • File a final single-tax / income declaration for the period up to the closure date.
   • Pay outstanding single tax, military levy, ЄСВ, and any VAT up to closure.
   • Cancel VAT registration if registered.
   • ЄСВ is owed up to the month of closure — file the closing ЄСВ report and settle.
3. Keep all records and primary documents for the statutory retention period (generally 1095 days / 3 years, longer in some cases). (Verify current value.)
4. The ДПС may run a closing review; debts surviving closure are pursued against the individual personally. (Verify current procedure.)

8.2 Formation checklist

• РНОКПП / tax number confirmed; ID ready (passport or Diia app)
• Registration channel chosen (Diia / ЦНАП / notary); QES or BankID ready if online
• КВЕД codes selected (1 primary + extras; none barred from single tax)
• Tax system decided (Group 1/2/3 vs general); single-tax заява filed within 10 days
• ЄСВ payer status confirmed (auto); exemption checked if pensioner/disability
• Turnover projected vs ₴1,000,000 VAT threshold; voluntary VAT considered
• Business current account opened; aware of 6-month monitoring on new ФОП
• ЄДР extract (витяг) downloaded; ДПС registration confirmed
• Reporting calendar noted (quarterly unified report from 2026); reviewer sign-off obtained

8.3 Authorities & sources

• Diia — diia.gov.ua (ФОП registration, ЄДР extract, changes, closure)
• State Tax Service (ДПС) — tax.gov.ua; taxpayer e-cabinet cabinet.tax.gov.ua
• Ministry of Justice — ЄДР (Unified State Register)
• КВЕД-2010 classifier — kved.ukrstat.gov.ua (State Statistics Service)
• Tax Code of Ukraine; Law No. 755-IV (state registration); Law No. 2275-VIII (LLCs); Law No. 2464-VI (ЄСВ)
• Big-4 reference: PwC Worldwide Tax Summaries — Ukraine

PROHIBITIONS

• Do NOT assert that single-tax status is automatic on ФОП registration — without a timely заява the ФОП defaults to the general system.
• Do NOT place a ФОП with foreign or legal-entity clients into Group 1 or Group 2 — only Group 3 may serve them.
• Do NOT confirm a КВЕД code is single-tax-eligible from memory; check the barred-activities list in ua-single-tax and flag for reviewer confirmation.
• Do NOT tell a single-tax ФОП they must register for VAT merely for crossing ₴1m — the turnover-based mandatory rule does not apply to single-tax payers (verify).
• Do NOT state ЄСВ can be skipped because there was no income — it is due at the minimum monthly amount unless a documented exemption (pensioner / disability) applies.
• Do NOT advise a non-resident / foreign founder without escalating to a qualified Ukrainian professional.
• Do NOT treat ФОП deregistration as ending tax/ЄСВ liabilities — final declarations, payments and (if applicable) VAT cancellation are still required.
• Do NOT present any amount, rate, limit, or deadline as final without a "verify current value/procedure" flag and reviewer sign-off.
• Do NOT draft a ТОВ charter, UBO declaration, or liquidation documents — route to a lawyer.

Disclaimer

This skill is research-verified against public sources (State Tax Service tax.gov.ua, Diia diia.gov.ua, Ministry of Justice, and Big-4/PwC material) for the 2026 tax year as of May 2026, but is pending sign-off by a qualified Ukrainian accountant. Ukrainian rules — especially under martial law — change frequently; figures, thresholds, and procedures marked "verify current value/procedure" must be confirmed against current official sources before relying on them. This is general information, not tax, legal, or accounting advice, and does not create a professional relationship. Every output must be reviewed and signed off by a qualified Ukrainian accountant or licensed adviser before it reaches a taxpayer or any authority. Part of the Open Accountants open-source tax-skills project — openaccountants.com.

Source: OpenAccountants — open tax Guides for AI, reviewed by named CPAs/CAs/EAs. Quality: source-cited draft. For always-current figures and named-accountant backing, connect the OpenAccountants MCP server (openaccountants-mcp).