How Sole Proprietors Accept Foreign Currency Payments

The author of the article: Denis Korablyov

Modified date: 29 May 2026

How can an individual entrepreneur accept payments from abroad in foreign currency without running into problems with the tax authorities? This is a question most entrepreneurs face. Some simply refuse such orders – and lose thousands of dollars because they are not sure how to prepare the documents correctly. Others do it incorrectly – and overpay taxes, receive fines, or lose their single tax payer status.  All of this can be avoided if the rules are understood before the payment, not after the first inspection by the State Tax Service.

In this article, we will explain how an individual entrepreneur can accept payments in foreign currency in 2026: what documents are needed for payments from abroad, how to prepare a foreign economic activity contract or invoice, how to calculate foreign currency income using the NBU exchange rate, and why cryptocurrency requires special caution.

How an individual entrepreneur can accept payments in foreign currency

You should think about how to document a payment from abroad not when the money reaches your account, but much earlier. Most problems arise precisely because the individual entrepreneur did not prepare the documentary basis in advance.

Step 1. Open a business account for the individual entrepreneur. Income from business activity may only be received into an individual entrepreneur business account. A personal account is not suitable for this purpose – and if a foreign currency payment is received there, it automatically becomes the income of an individual with the corresponding taxation: 18% personal income tax + 5% military levy.

If the client pays in foreign currency, a separate foreign currency account is required. There are two options here: 

Does the bank offer a multi-currency account?  Choose it if clients pay in different currencies. Then you will not have to open several accounts and track each one separately. In principle, there are no restrictions on the number of accounts: theoretically, you can have many accounts in different banks.

Important: before choosing, it is worth checking the bank’s conversion terms and fees – they may differ significantly. 

Another important point: foreign currency proceeds cannot be transferred directly to a personal foreign currency account. It is also often not possible to withdraw foreign currency in cash from a business account – except in certain cases, such as business trips abroad. 

Sometimes some banks process this operation through double conversion: 

foreign currency → hryvnia → foreign currency 

Formally, this is a workaround of the restriction, but the banks themselves cover the commission costs that arise. Before using this option – check with your bank whether it offers it and under what terms.

Step 2. Check whether you are violating the conditions of your single tax group. This is where most questions arise for individual entrepreneurs in Group 2.

Under the law, an individual entrepreneur in Group 2 may receive payments from non-residents only for goods. Not for services. If an individual entrepreneur in Group 2 receives a foreign currency payment for services from a foreign client, the consequences are serious: 

• cancellation of single tax payer status, 
• retroactive transfer to the general tax system 
• additional tax charges for the entire period, together with fines and penalties. 

That is why it is important to clearly check the conditions of your individual entrepreneur tax group.

If an individual entrepreneur provides services to non-residents, the only correct solution is to switch to Group 3 of the single tax system before the first such payment. Remember that the application must be submitted 15 days before the start of the new quarter.

Step 3. Decide on the format of your relationship with the foreign client. Will this be a one-time cooperation or an ongoing arrangement? This determines which documents are better to use. The bank and the tax authorities must also understand the basis for the funds received: who is paying, for what, and why this exact amount. Without this – requests, delays, and potential payment blocking. We will explain exactly what this document should look like and what it should include in the next section.

What documents are needed to receive payments from abroad

When a payment comes from a foreign client, the bank looks not only at the amount – but also at whether this payment can be linked to a specific agreement. If it cannot – requests, delays, and potential blocking of funds may begin until the circumstances are clarified.

The basis here is an agreed set of documents where everything matches logically: the amount, currency, and payment purpose. For example, a discrepancy between the invoice and the SWIFT message is already a reason for questions.

Here is what should be included in this set of documents:

1. Invoice – the main document for each payment received. For the export of services, an invoice in electronic form is sufficient. It should include: 

• the parties 
• the subject matter
• the amount
• the currency 
• the payment deadline. 

Some payment systems allow you to create an invoice directly in the system, for example, Payoneer.

2. Certificate of completed work. The bank may request it for currency control. Even if an invoice is enough in your model, a certificate may sometimes be needed upon request. It is better to have it prepared in advance.

3. International contract for foreign economic activity. It is needed to define the rights and obligations of the parties, as well as to settle potential conflict situations in advance. It does not have to exist only in the classic “paper” form. Read more about it in the next section of the article.

Payment purpose in SWIFT MT103. This is field “:70” in the SWIFT message – and it is exactly what the bank relies on. It should include a reference to the number and date of the contract, invoice, or other document under which the funds were received. If the client filled in this field incompletely or incorrectly – a free-form letter will be needed, where the client clarifies exactly which document the payment was made under.

4. Bank statement. It confirms the fact that the funds were received. This is a primary document that records the date, amount, and currency of the payment. Keep it together with the other documents for each payment.

Depending on the specific transaction, the bank may request additional documents. But all of them must not contradict each other – if there is any discrepancy, the bank will ask for an explanation. And if there is no explanation – the funds may be held until the circumstances are clarified. 

Important: for foreign currency receipts, the bank may carry out currency supervision and request supporting documents. And if the client ignores the bank’s request – the bank may delay the transaction or request an explanation as part of currency supervision and financial monitoring.

How to calculate an individual entrepreneur’s income in foreign currency

For an individual entrepreneur on the single tax system, the rule is simple: 

income in foreign currency is recorded on the date the funds are credited to the business account. 

That is, on the day the funds are received, the foreign currency amount must be converted into hryvnia using the NBU exchange rate – and this exact hryvnia equivalent is reflected in accounting records and in the tax return. The algorithm is as follows: 

the money is credited to the foreign currency account → record the date → check the NBU exchange rate for that date → convert the amount into hryvnia → include it in income

Often, the bank statement already includes the hryvnia equivalent at the NBU exchange rate – in that case, there is no need to look up the rate separately.

One more nuance: there is no mandatory sale of foreign currency. This means it may remain in the business account at a Ukrainian bank for an unlimited period of time. For tax accounting, the important date is the initial receipt of the funds – not the moment when you later decide to sell the currency.

Should bank fees be deducted from income

In international transfers, the bank often charges a fee. As a result, the actual income may be lower than the amount stated in the invoice. In this situation, you should rely not on the bank statement, but on the supporting documents.

For example:

So for tax accounting, it is important that the amount in the documents matches the amount you report as income. In this model, fees are expenses. But for an individual entrepreneur on the single tax system, this does not give the right to reduce income, because simplified tax payers do not take expenses into account.

Should exchange rate differences be taken into account

Foreign currency income is recorded once – on the date of receipt at the NBU exchange rate. A later exchange of foreign currency into hryvnia no longer changes this income amount. If you sold the currency at a higher or lower rate – it does not matter for the tax return.

But there is a nuance: the tax authorities sometimes try to include a positive exchange rate difference in income if the exchange rate turns out to be higher than the NBU rate on the date of receipt. A negative exchange rate difference, on the other hand, is not taken into account – for a simplified tax payer, it is an expense. And if the tax authorities insist on their position, the matter often reaches the court stage. Such tax disputes are better settled with a specialist.

But if you work through Payoneer or Wise – this is a separate topic with its own rules regarding the income date and tax rate. Read more in our article “Taxation of foreign currency receipts for individual entrepreneurs using Wise and Payoneer”. 

Can an individual entrepreneur accept payment in cryptocurrency 

Some foreign clients offer to pay in cryptocurrency. It looks convenient – but there are serious restrictions here, and they apply both to simplified tax payers and to individual entrepreneurs on the general tax system.

The reason is that cryptocurrency in Ukraine still does not have a clear legal status. It is not hryvnia, but it is not foreign currency either – it is more like a “commodity”. This means that payment in cryptocurrency may be classified, for example, as a barter transaction. In other words, an exchange of a service or product not for money, but for another product. 

At the same time, legislation in this area is actively developing. And the regulation may change significantly in the near future. Therefore, before making any decision regarding crypto – it is worth checking the current status of the law.

Cryptocurrency for individual entrepreneurs on the single tax system

Barter is directly prohibited for simplified tax payers. And if cryptocurrency falls under the definition of barter, it is also prohibited. If crypto is still accepted, the tax authorities may additionally charge 15% of the amount of such transaction and deprive the individual entrepreneur of single tax payer status. In other words, one such payment from a client – and the entrepreneur is removed from the simplified tax system.

Cryptocurrency for individual entrepreneurs on the general tax system 

There is no direct ban on cryptocurrency. But if the transaction is classified as a barter transaction, it has its own consequences for accounting and taxation. How exactly it should be reflected depends on the specific situation. And if the draft law comes into force, the taxation of cryptocurrency income will change. You cannot do without an accountant’s consultation here – the cost of a mistake may turn out to be higher than the amount of the transaction itself.