Taxation of the funds encouraged to the foreign account of the Individual entrepreneur on a single tax

Taxation of funds promoted in a foreign account by an individual entrepreneur (FPO) subject to a single tax is a topic that raises many questions among entrepreneurs.

The taxation system in Ukraine offers several regimes for sole proprietorships, including a single tax that has its characteristics.

The legislation of Ukraine allows FOP to open accounts abroad on a single tax basis, but this imposes certain obligations, in particular with regard to taxation.

It is important to understand that regardless of the place where the funds are deposited, the income of the FOP must be taxed by Ukrainian legislation and paid to the Ukrainian budget.

Basic aspects of taxation

Single tax: Individual entrepreneurs the single tax pay a fixed tax, the amount of which depends on the selected group, this is a fixed rate on the II group of FOPs and 5% of the profit, or 3% + VAT on the III group of Individual entrepreneurs.

It is important to note that funds in a foreign account are not exempt from taxation and must be reflected in the entrepreneur's financial statements.

• Currency control: Ukrainian Individual entrepreneurs who open accounts abroad are subject to currency control requirements. They are obliged to inform the tax service about the opening and closing of accounts, as well as about the amount of transfers.
• Tax on income from abroad: When receiving income from a foreign account, the FOP may face the need to pay personal income tax at the rate of 18% and a military levy of 1.5%, if such income was not taxed within the scope of the single tax.

It is important to know about double taxation for sole proprietorships on the single tax whose activity is related to conducting business abroad. Ukraine has treaties on the avoidance of double taxation with many countries. T

his means that income received abroad may be exempt from taxation in Ukraine or tax paid abroad may be credited as a credit against tax liability in Ukraine.

It is important to document the payment of taxes abroad to take advantage of this opportunity.

Practical advice

• Tax planning: Careful planning and accounting of all income and expenses will help avoid tax mistakes and minimize tax liabilities.
• Consultation with specialists: Given the complexity and dynamics of tax legislation, it is recommended to consult with tax advisors or lawyers, especially when dealing with foreign accounts.
• Tax reporting: Timely and correct tax reporting is the key to avoiding fines and penalties for tax violations.

Conclusion

Taxation of funds in a foreign account for a sole proprietorship on a single tax requires careful attention to tax legislation and currency regulation.

Entrepreneurs need to ensure compliance of their activities with Ukrainian tax requirements, as well as take into account international aspects of doing business.

Therefore, effective financial management and qualified support can help a sole proprietorship successfully navigate difficult tax waters.