Simplified Tax System in 2026: All Groups for Sole Proprietors (FOP) and Companies (LLC)

The author of the article: Denis Korablyov

Modified date: 09 March 2026

The simplified taxation system in 2026 includes 4 groups of the single tax for FOPs and LLCs with different income limits, tax rates, and restrictions. In this article, we will explain how to choose the single tax group in 2026, what limits and restrictions apply, and what to consider before registration.

Which group is right for you: the logic of choosing

The correct choice of group primarily depends on who your client is and where the money comes from. Not on the name of the business, not on turnover, and not on the number of products.

Simple scheme:

• You sell anything to anyone at a market or provide household services – group 1.
• You sell goods or provide services to individuals and other simplified taxpayers in Ukraine – group 2.
• You provide services to large Ukrainian companies (general taxation system) or clients abroad – group 3.
• You grow agricultural products – group 4.

The second key condition is the KVED activity code. Each group has permitted and prohibited types of activity. Before registration, be sure to check whether your KVED fits the selected group. 

Typical mistake when choosing a group

The most common mistake is registering for group 2 and then receiving payments from legal entities on the general taxation system for services. 

This is a violation of the conditions of staying on the simplified taxation system (in particular group 2) and grounds for cancellation of the single tax status. 

If your clients include companies on the general taxation system or foreign customers – you need group 3.

A detailed explanation of choosing between group 2 and group 3 for FOP with examples of tax burden calculations can be found in a separate article.

Income limits for all groups in 2026

The limits are tied to the minimum wage as of January 1 of the current year. In 2026, the minimum wage is 8,670 UAH. The limits apply from January 1 to December 31 and are updated every year.

Important: the limits are calculated based on total turnover, not net profit. Expenses do not reduce the tax base – the exception is work under a commission agreement or agency agreement (only the commission fee is included in income).

Registration deadlines and switching to another FOP group

Switching to another FOP group is possible quarterly – provided that the application is submitted no later than 15 days before the start of the new quarter.

When the new group takes effect

• Groups 1 and 2 – from the first day of the month following the application. If you submit the application on March 20 – you start the new group on April 1. Until then – the general taxation system.
• Groups 3 and 4 – from the moment the application is submitted, without waiting.

You can change the group quarterly – 15 days before the start of the new quarter:

• in December (new group from January 1);
• in March (from April 1);
• in June (from July 1);
• in September (from October 1).

After submitting an application for the single tax, you must independently verify that you have been registered. The most reliable way is to obtain an extract of the single tax payer register. If the registration is not confirmed and the FOP receives payments – they are treated as income under the general taxation system, which leads to 18% personal income tax.

Three common reasons for registration refusal:

• an error when filling out the application;
• any tax debt (even a few dozen hryvnias for property or land tax);
• a technical failure – the application did not reach the tax office.

If there is no response within 2–3 business days after submission – you should contact your local tax office.

Grounds for cancellation of the single tax

The simplified taxation system can only be cancelled based on the results of a documentary audit (Art. 299.11 of the Tax Code of Ukraine). Cancelling the single tax during a factual or desk audit is illegal.

Five grounds for cancellation:

1. Exceeding the income limit – cancellation may be applied retroactively.
2. Non-cash settlements – barter, mutual offsets, compensation of utility payments, gift certificates used instead of payment.
3. Prohibited business activities (KVED codes) – receiving income from activities that are not allowed for your group.
4. Exceeding the rental area limit – more than 400 sq. m of residential or 900 sq. m of non-residential property.
5. Exceeding the number of employees – more than 10 employees for Group 2.

After the cancellation of the single tax status, it is possible to return to the same group only after 12 months.

RRO/PRRO under the simplified taxation system in 2026

The requirement to use an RRO or PRRO does not depend on the group or the type of activity but on the method of receiving payment. FOPs in Groups 2 and 3 have no turnover threshold: even from 1 hryvnia of turnover in settlement transactions, a cash register is required.

Exceptions:

• Group 1 – a cash register is not required until the end of martial law regardless of the payment method.
• FOPs in active combat territories – a cash register is not required.

Primary documents and financial monitoring

To confirm the legality of business activity, a simplified taxpayer needs a bank statement or cash report. Based on these documents, the income record book is maintained.

If a FOP sells goods, primary documents confirming their origin are required:

• High-risk product categories (complex electronics, jewelry, medicines): strict accounting according to the Ministry of Finance form. The penalty for absence – 100% of the sales amount for each unit.
• All other goods: primary documentation is mandatory, but the penalty for its absence is a fixed 1,020 UAH for the entire violation.

Bank financial monitoring

Banks actively check FOP accounts in two cases:

• monthly turnover in one bank exceeds 1,250,000 – 1,300,000 UAH;
• the FOP withdraws more than 50% of their turnover in cash.

If these thresholds are exceeded, the bank may request primary documents and explanations regarding the source of funds. Without documents – account blocking.

Foreign currency income under the simplified taxation system

FOPs in Group 2 may receive foreign currency only for goods. FOPs and LLCs in Group 3 may receive foreign currency for both goods and services without restrictions.

Income received in foreign currency is included in total turnover at the NBU exchange rate on the date the funds are credited – regardless of when and at what rate the currency will be sold.

During martial law: withdrawing foreign currency in cash from a FOP account is prohibited. To use the funds, the currency must first be converted into hryvnia. However, it is allowed to keep foreign currency in the account without selling it.

Read more about FOPs and foreign currency income in a separate article.

Reporting under the simplified taxation system: deadlines and structure

Main reports

• Groups 1, 2 and 4 – single tax declaration once per year.
• Group 3 – declaration submitted quarterly (4 times per year).
• FOPs of any group – the annual declaration includes the SSC appendix (if SSC contributions were paid and no exemptions apply); agricultural FOPs must also submit the Minimum Tax Liability appendix for land plots.

Special reports (depending on the type of activity)

• Unified reporting for employees – quarterly (if employees are hired).
• Tourist tax declaration – if temporary accommodation services are provided.
• Land payment report – if municipal or state land is leased.
• Statistical report – for FOPs engaged in freight or passenger transportation or industrial production.

Reservation (mobilization exemption): FOP vs LLC

FOPs operating under the simplified taxation system cannot reserve either themselves or their employees from mobilization. This applies to all single tax groups.

Reservation is available only for legal entities (LLCs and similar) operating under the general taxation system or registered in Diia.City. FOPs, regardless of their group, are not eligible for reservation.

If employee reservation is critical for your business – consider registering an LLC under the general taxation system or within the Diia.City framework.

Conclusion

The choice of the single tax group is determined by two factors: who your client is and which KVED codes you need. Nothing else is primary.

Key risks when working under the simplified taxation system: receiving payments from prohibited categories of clients, exceeding the income limit, and the absence of primary documentation. Cancellation of the single tax status is possible only after a documentary audit, and after cancellation it is possible to return only after one year.

If your business structure or client base changes – check whether your current group still corresponds to your operating conditions. The group can be changed quarterly.