A private entrepreneur in Ukraine is a business form that allows an individual to own his or her own business, having access to the entire profit derived and also being fully liable for the business. It is often also referred to as the sole proprietor.
One of the most important advantages of the Ukrainian private entrepreneur is that it is the simplest business form that is available for use in the country. This means that the individual will have lighter accounting and reporting requirements and will not be concerned with issues such as auditing.
Read below to find out more about this business form as well as how to receive assistance if you wish to start your own business. Our team of agents who specialize in company formation in Ukraine assist investors who wish to open companies, as well as those who wish to operate as a private entrepreneur in Ukraine.
The main conditions for the private entrepreneur in Ukraine
The sole trader is a simple business form that does not require the founder to draw up a set of complex Articles of Association or determine a shareholding structure. It is, however, subject to a set of requirements:
Formation: this business form is registered in front of a notary office in a Ukrainian city of choice;
Registration: an individual can only be registered as a private entrepreneur if he or she has a residence permit;
Object of activity: like in the case of other business forms, the sole trader will need to specify a main type of activity, chosen from the list of economic activities;
Tax: a simplified taxation regime is available for this simple business form; as needed, our team can also give you details about the VAT registration.
Entrepreneurs who are ready to open a company in Ukraine and choose to work as a sole trader can rely on our services and advice if they wish to register this simple business form.
We assist those who are ready to register as an Ukrainian private entrepreneur and can provide details about the types of economic activities available in the official Ukrainian list, or the KVED, overseen by the Ministry of Economy.
The taxation of the private entrepreneur
The taxation regime applicable to the business is an important issue to take into account when starting the economic activities, especially as a sole trader who is fully responsible for his activities.
The private entrepreneur in Ukraine benefits from a simplified tax regime which exempts them from the regular corporate income tax, should they meet certain requirements:
- Group 1: only for private entrepreneurs, they cannot have employees and the tax rate is up to 10% of the subsistence minimum;
- Group 2: available to private entrepreneurs only, not to companies; can have employees but no more than 10; the tax rate is up to 20% of the minimum wage;
- Group 3: this group is also available to qualifying companies, not only private entrepreneurs, therefore there are no limitations on the number of employees; the tax rate in this case can be 3% or 5% of the income, not including VAT;
- Group 4: available to private entrepreneurs and companies, available to certain agricultural producers.
Please keep in mind that a certain maximum yearly profit applies to the private entrepreneur in Ukraine who wishes to benefit from the simplified taxation regime. Certain limitations for the simplified tax regime can also apply in terms of the activities performed by the legal entity or sole trader. For example, the first group is suitable for retailers while the second and third groups are destined for IT companies or restaurants, among others.
The regular corporate income tax in Ukraine is 18%. For more information on taxation, as well as certain aspects regarding the taxation of agricultural producers who can be subject to special provisions, please reach out to our team of tax experts.
We invite you to watch the following video about this business type:
The private entrepreneur can be a suitable business form for professionals who are ready to start and manage their own activities, and who are willing to manage the risks that derive from the full liability of this business form.
It should be noted that foreign nationals in Ukraine cannot register as a sole trade if they are not residents, either temporary or permanent. Qualifying foreign residents will need to provide their assigned Ukrainian tax number for the purpose of registering as sole traders.
When registering this business form, the associated expected costs are those for the notary fees, as well as other fees that may be needed to prepare or translate documents (in case of foreign investors).
For more information about the private entrepreneur in Ukraine, please contact our company formation specialists.
Call us now at +7(495)504-12-15 to set up an appointment with our lawyers in Kiev, Ukraine. Alternatively you can incorporate your company without traveling to Ukraine.
As a Herman & Smith law firm client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Ukraine.