All about sole proprietors (FOP) of the 3rd group in Ukraine: taxes, reporting, and income withdrawal

The author of the article: Denis Korablyov

Modified date: 08 November 2025

Individual entrepreneurs of group 3 in Ukraine are the most popular small business format due to simple registration, affordable taxes and minimal bureaucracy. But behind the convenience are dozens of nuances: settlement rules, prohibited activities, restrictions on working with banks and reporting requirements. In this material, we analyze in detail taxes, reporting deadlines, registration of individual entrepreneurs, bank accounts, receiving funds, PRRO, limits and practical advice so that you can avoid mistakes and fines and conduct business calmly and legally.

Individual entrepreneurs of group 3 are the favorite format of small business in Ukraine. It is not for nothing that this group remains the most popular among entrepreneurs: simple registration, minimum bureaucracy and relatively low tax rates are the perfect combination for a start. Especially if you are on a single tax. At first glance, everything looks simple: 6% of income (along with military duty), SSC – and work in peace. But behind this “simple” there are dozens of nuances that can cost you both money and nerves. In this article, we will analyze everything about paying taxes, deadlines, fatal mistakes, practical cases and fines.

Individual entrepreneur of group 3: general information

A sole proprietorship in the third group is the most popular and universal model of work among entrepreneurs. There is almost complete freedom here: you can provide services, sell goods, work with companies that are VAT payers, and even with clients from abroad. You can accept money from individuals or legal entities; from Ukraine or from abroad; for goods or services – without restrictions. In addition, this is the most profitable group, because a single tax is paid on the income received for each quarter, and in its absence it is not paid at all. However, if you had no income, from January 2025 you will have to pay the SSC, because this is your contribution to pension and social security. But more on that later.

Despite its universality, there are things that are strictly forbidden for individual entrepreneurs in the third group. And if you violate these rules, you can automatically lose the right to be on a single tax. And this is another level of responsibility, including fines.

Registration of individual entrepreneur group 3

If you still decide to register an individual entrepreneur , then let us immediately encourage you: this process is not at all complicated. You can simply submit an application through Diya – select the KVEDs, click “send”, and in 2-3 days the individual entrepreneur is already registered. And you can find step-by-step instructions for opening an individual entrepreneur through Diya in our video on the channel.

So, by registering an individual entrepreneur in the third group – you are entered into the register immediately, that is, from the moment of submitting the application. This means that from this day on you are officially an individual entrepreneur and can conduct business or already have responsibilities that you don’t even realize you have.

And here, many people mistakenly think that it is not necessary to check your entrepreneur status after submitting an application to the Diya. But there are situations when the Diya either does not forward your application to the tax office at all, or the tax office refuses, and you do not even know about it.

Therefore, it is MANDATORY to check whether you have indeed been granted the status of a single tax payer. This is easy to dо on the tax authority website – look for yourself in the payer’s credentials. If you see that your group is the third, everything is fine. If it’s empty, then something went wrong.

And another important point regarding registration. At the exit, that is, after registration, you must have two documents in your hands before you start accepting payments.

The first is an extract from the Unified State Register, which confirms that you are registered with the Ministry of Justice. It is issued by the Ministry of Justice. And the second is an extract from the single tax payer . It can be found in the payer’s electronic account . Please do not neglect this. This is not just a formality. Without these documents, you may be fined, even if you are already officially registered. Check it, keep it for yourself, and only then start working.

Individual entrepreneur bank account

Now let’s deal with a very important issue – a bank account for an individual entrepreneur.

1) When you open an account, the bank will ask you how much you plan to receive. Don’t be afraid – specify more. It won’t be a burden. you with additional taxes, but the higher the estimated turnover you declare, the less likely it is that the bank will start checking your every transaction through financial monitoring.

2) Remember: the bank will monitor you very closely for the first six months. This is like a kind of “trial period”. And if your payments seem suspicious, the account may be blocked. Therefore, it is better not to experiment.

3) Large amounts of cash that you withdraw from your account are also a trigger for the bank. If you often “withdraw cash” – you may run into a check or blocking.4) Although the limit for the third group of FOPs is quite large, banks divide it by month. In general An individual entrepreneur in the third group can receive payments of 1,167 minimum wages, that is, in 2025 it is 9 million 336 thousand. This is the annual turnover limit. And if you significantly exceed this conditional limit, the bank can initiate an audit.

How to accept funds for individual entrepreneurs? Do individual entrepreneurs in group 3 need a PRRO?

Once you have registered your sole proprietorship and opened an account, the next question is how to accept funds. And this is where the fun begins. It is important to set up the payment acceptance process so that everything is legal and without unnecessary headaches.

Let’s start with the limits. If you are in the third group, you can earn up to 1,167 minimum wages per year. That’s 9 million 336 thousand hryvnias in 2025. And this is your official annual turnover limit.

And you can receive this money in 2 ways:

• to a bank account. But not to a regular card! You must definitely open an account specifically for an individual entrepreneur;
• cash. And since receiving cash is a settlement transaction, it requires the use of the PRRO in any case.
  

For example, if you are an IT professional working through Upwork or receiving payment from abroad, you don’t need a cash register. If you sell jewelry for cash, you need one. If you do massage and receive payment from a client in cash, you also need one. If you provide services online and receive payment via acquiring or AIBAN, you don’t need a cash register.

But there are other things that are important to consider in order not to get serious fines. For example, as an individual entrepreneur of group 3, you can have an unlimited number of employees, but if you have 8 employees, one person must be a person with a disability, otherwise the fine will be more than 80 thousand hryvnias per year. If you receive payment under the KVED, which is not in the register, you may be deprived of the simplified system. The same applies if you exceed the income limit or have a debt of more than 3060 hryvnias for two quarters in a row, you will be transferred to the general system.

And one more thing: you can’t just pay from a sole proprietorship account to an individual. All such payments are subject to an 18% income tax rate and a 5% military levy.

If you haven’t dealt with PRROs yet, you can watch our video on the channel, where we talk about the most profitable options for software RROs and their registration.

Payment services for individual entrepreneurs of group 3. Which ones to choose, which is more profitable?

Today, many people use international payment services – such as Payoneer, Wise, Revolut, Paxum, VIM, etc. So: an individual entrepreneur in group 3 has the right to receive money even through these services – the main thing is that all funds are eventually deposited into the individual entrepreneur’s official account in a Ukrainian bank.

Only after that can you pay taxes and be sure that there are no claims against you.
If you received money on a conditional Payoneer – and did not transfer it to an account in Ukraine, but simply declared income. Such a scheme is risky, especially considering that banks and the tax office synchronize data today.

Ago remember Rule: only after funds are credited to the foreign currency account of an individual entrepreneur in Ukraine is it considered that you have legally received income.

Payment of taxes to individual entrepreneurs in group 3

An individual entrepreneur in the third group in 2025 has three main taxes:

• 5% of the single turnover tax;
• 1% military tax, also from turnover;
• And the single social contribution ( SSC ) – this is a fixed amount, which is currently 1760 hryvnias per month, but is paid once a quarter, in one lump sum. This is 5280 hryvnias.
  

Regarding VAT, then most individual entrepreneurs in group 3 are not VAT payers. But you can become one. Then the taxes will be as follows: 3% EP, 1% military duty, and of course SSC plus VAT. Usually, individual entrepreneurs become VAT payers at the request of clients who need suppliers with VAT. And then certain features and burdens arise.
First, a separate tax invoice must be registered for each sale.
Second, the income and expense book is kept not in a free form, but in a strict state form. And third, mandatory inventory accounting is when you keep a list of all invoices for the purchase of goods that you then sell.

So, in short, an individual entrepreneur in the third VAT group has more reporting, responsibility, and requires attention to each document.

Reporting, deadlines

All reports of individual entrepreneurs of group 3 are submitted quarterly, using the cumulative method, and not every month. That is:

• in the report for the first quarter (January-March), you indicate income only for this period;
• but in the report for the second quarter – you already show the amount for the first plus second quarters ,
• in III – the amount for three quarters ,
• and in IV – for the whole year .
  

You have 40 calendar days after the reporting quarter to submit reports.

And attention! It is in the report for the 4th quarter that the supplement on the Social Security Contribution is added, where you indicate that you paid contributions to the pension fund. And only then are these contributions taken into account in your insurance experience.

Who can avoid paying the EUC?

We remind you that there are categories that may not pay the social security contribution – these are old-age pensioners, persons with disabilities, mobilized self-employed persons, those for whom the employer pays, as well as persons registered in temporarily occupied territories. However, the social security contribution and military levy (5% and 1%) are always paid if there is income.

And if there is no income, you only pay the SSC from taxes and submit a report. Otherwise, the chronology of the cumulative report is violated.

An important clarification – if you are a mobilized entrepreneur, then for the entire period of your military service you are exempt from paying taxes and filing reports. This also applies to self-employed individuals: if you were mobilized or signed a service contract, the obligations to pay taxes and file reports are “put on hold” for this time. Such changes have already come into force thanks to Law No. 4505, which introduced relevant amendments to the Tax Code.

Can an individual entrepreneur in group 3 change their tax group?

In general, an individual entrepreneur in group 3 can change their tax group – for example, move to group 1 or 2, or even choose group 3 with VAT. However, such a change is allowed once a year. This means that you, as an entrepreneur, can move from the first group to the second or third, or vice versa, but not more than once a year, 15 days before the end of the quarter. If you decide to change groups, it is better to plan everything in advance and not wait until the last minute.

*If you have any doubts about which group to choose or when to submit an application, don’t hesitate to contact an accountant, this way you will definitely not miss any deadlines.

Confirmation of receipt of funds to the individual entrepreneur’s account

In fact, everything is not so complicated here. If you are an individual entrepreneur in the third group and receive money, you need to be ready to show the tax office or the bank where this money came from. It is most convenient to have a bank statement on hand. If you work with cash, keep Z-reports from the cash register. For the third group, the income accounting book is more “for checking”, the main thing is to have statements or checks.

And don’t forget about contracts, invoices, deeds, and delivery notes. Without these papers, you can run into a fine – currently it’s 1,020 hryvnias. Some people wave their hands: “Oh, I’ll pay the fine and that’s it!” But it’s not that simple: if a dispute arises with a client or the bank decides to “poke around,” it will be difficult to prove anything without documents.

Therefore, it is better not to play the lottery. Keep all the documents so that you do not run around in a panic later and do not remember where that contract went. If you do not want to deal with papers – outsource it to an accountant. It is easier, cheaper and really saves nerves.

By the way, not only classic contracts are suitable for individual entrepreneurs. There are also specific options – for example, a commission, agency or freight forwarding contract. The trick here is that the income of an individual entrepreneur is not calculated on the entire amount that came in, but only on your agency fee – and it is from this part that you pay taxes. But there is a nuance: such contracts require very careful preparation of all primary documents. Here, every receipt, every act is really worth its weight in gold, because they prove that you did everything correctly.

How can a group 3 individual entrepreneur spend his income?

And now let’s move on to the most interesting part. Let’s analyze how an individual entrepreneur in the third group can spend their already taxed funds.
Let’s start with the basic one: your individual entrepreneur tax return is official proof that you received income legally.
And this is enough to buy an apartment, a car or other expensive things – and not worry about being asked about the origin of the money.

How to withdraw funds from an individual entrepreneur account? Hryvnia and currency

If you receive hryvnia, you can safely withdraw cash (we recommend no more than 50% of what you received), or transfer funds to a personal card and pay for everything you need from it: purchases, utilities, even trips.

Now about currency. If the money has been deposited into a foreign currency account of an individual entrepreneur, then now, due to wartime restrictions, it is not possible to pay for everything in this currency directly in Ukraine – there are certain limits from the NBU. Therefore, it is better to clarify with the bank which payments are allowed.

But you can either keep this currency as long as you want – no one is forcing you to sell it; or exchange it for hryvnia and continue spending it like regular hryvnia: withdraw, pay, transfer.

And there is another practical scheme that works for those who want to keep savings in foreign currency abroad.

To do this, first receive hryvnia to a sole proprietorship account. Then transfer it to your personal account as an individual. Then, through the bank’s application, you buy currency – up to 50 thousand UAH per month (in equivalent). Or even without buying: up to 100 thousand UAH can simply be transferred from your personal card to your foreign card – for example, Wise, Revolut or ZEN.COM. And that’s it. Thus, the hryvnia that you earned as a sole proprietorship is legally converted into currency, and you store it abroad.

Practical advice for individual entrepreneurs of group 3

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Conclusion

Being an individual entrepreneur in the third group is really convenient and profitable. But it is also a big responsibility, because behind the simplicity of this system there are many nuances: correct cash management, tax payment, selection of KVEDs, reporting and many other points. If you miss something, you can get a fine or lose the right to work on a simplified system, and this is a completely different story with higher taxes and hassle. If you have any questions, contact the bukh.ua team, and we will advise you.