Exempt from taxes and reporting. What it fops that have been mobilized need to know-we are dealing with a lawyer

In connection with the full-scale invasion of Russia, martial law has been in effect in Ukraine since February 24, and Presidential Decree No. 69/2022 has declared a general mobilization. Together with Irina Syroid, a lawyer at Trustme Law Firm, we found out what is the procedure for conscription of sole proprietors and whether they have benefits for paying taxes and maintaining reports for the duration of military service.

1. What is the procedure for calling up fops?

Fops are not exempt from mobilization, the procedure for conscription is general. An exception is for persons who are unfit for health reasons, have three or more dependent children under the age of 18, independently raise a child (s) under the age of 18, that is, without a second parent, have a dependent child with a disability, are guardians, Guardians, foster parents, caregivers, are engaged in constant care of persons in need, and so on.

2. I received a subpoena. Do I need to close the FLP?

No, mobilization does not mean automatic or forced liquidation of the sole proprietor. If the company does not break off cooperation with you for the duration of the call, you do not need to do anything with the FLP. If it breaks, but you plan to continue working in IT after demobilization and you will need it, you don't need to close it either.

There is a nuance only for a mobilized sole proprietor who has employees. The sole proprietor can continue to carry out its activities, but it needs to appoint an authorized person in advance who will charge employees salaries and coordinate their activities. To do this, you need to sign a power of attorney with a notary. Taxes for employees must be paid. If the conscript is not ready for this option, he can liquidate the sole proprietor and terminate employment contracts with employees.

If you decide to liquidate an individual entrepreneur, keep in mind that when martial law is in effect, it is possible to stop doing business, but the work of registers and state registrars is limited. Therefore, the removal of the sole proprietor from the tax register and verification will take place later, since there is now a moratorium on tax audits.

3. What about taxes and reporting for sole proprietors at the time of conscription?

Sole proprietors IT specialists are usually on the simplified tax system (Group 3, single tax rate of 5 %) and pay a single tax and ERU for themselves. For the period of mobilization, sole proprietors are exempt from their payment and reporting (in accordance with paragraph 25 of subsection 10 "other transitional provisions" of the tax code of Ukraine and Section 9-2 "final and transitional provisions" of the law of Ukraine "on collection and accounting of a single contribution to mandatory state social insurance"). But you need to write an application and provide a copy of the military ID card (or other draft document). Documents must be submitted to the tax inspectorate at the place of registration within 10 days after demobilization (or after the end of treatment).

If the company with which the sole proprietor cooperates keeps payment for him for the duration of his service in the military, he is still exempt from taxes.

In general, tax and reporting benefits apply to all sole proprietors called up for military service and are valid for the entire period. Also, according to the law of Ukraine "on amendments to the tax code of Ukraine and other legislative acts of Ukraine concerning the specifics of taxation and reporting during Martial Law" No. 2118-IX of 03.03.2022, there are general "mitigations" for taxpayers. Separately, exemption from liability for violation of deadlines for payment of taxes and fees, submission of reports, sanctions for violation of the legislation on RRO are not applied, and a moratorium on tax audits is in effect.

Note that fops under the general tax system are exempt from all taxes (personal income tax, ERU), except for the military fee.

As for those who pay VAT, according to the law of Ukraine "on amendments to the tax code of Ukraine and other legislative acts of Ukraine regarding the operation of norms for the period of martial law" No. 2120-IX of 15.03.2022: "payers of the single tax of the third group are exempt from the obligation to calculate, pay and submit tax reports on Value-Added Tax on operations for the supply of goods, works and services, the place of delivery of which is located in the customs territory of Ukraine".

If there are employees, the sole proprietor appoints an authorized person for the period of his military service — we have already mentioned this above. It pays employees wages, calculates and withholds personal income tax, military duty, and ERUS.

On ERUS for employees called up during mobilization for military service in the Armed Forces of Ukraine. According to Law No. 2120-IX, individual entrepreneurs belonging to Groups 2 and 3 of single tax payers have the right not to pay ERUS for such employees by their own decision. In this case, the ERU will be paid by the state from the state budget.

Taxes for employees are paid by the sole proprietor within 180 calendar days from the first day of demobilization (without charging penalties and financial sanctions). Reports are submitted within the time limits established by law, and there are no penalties or penalties for late submission.

4. will I receive payment for military service as a sole proprietor? What about other social guarantees?

There are no special payments for the duration of Service for sole proprietors. But now, regardless of mobilization, All sole proprietors are entitled to receive a one-time monetary assistance in the amount of UAH 6,500, if tax reports are submitted for the fourth quarter of 2021 or for the whole of 2021. The only condition to receive assistance is that the FLP must be registered in the regions where active military operations are conducted (Chernihiv, Sumy, Kharkiv, Kherson, Mykolaiv, Zaporizhia, Donetsk, Luhansk, Kiev, Zhytomyr, Odessa, Volyn, Dnipropetrovsk regions and the city of Kiev).

Guarantees for the duration of performing state or public duties related to mobilization apply only to employees. Employees called up for military service retain their place of work, position, and average earnings.