Write-off of single tax debt (SP) due to bankruptcy

Since 2019, Ukraine has been operating under the Law on Bankruptcy and Debt Restructuring. It provides a procedure for debt relief, including the possibility to write off the single tax debt through bankruptcy.

Today, bankruptcy remains the only legal method for debt cancellation and relief from creditor pressure. Debt may be fully written off or restructured. However, the bankruptcy procedure is not simple. It is advisable to use the support of professional lawyers. The attorneys of our law firm, “Prikhodko & Partners,” have extensive practical experience in financial cases.

Main Stages of the Bankruptcy Procedure

Let us review the bankruptcy procedure using the example of individual bankruptcy. According to current legislation, this is a procedure that allows a private entrepreneur to be officially recognized as unable to fully repay debt.

The main goal is to relieve an individual entrepreneur from the burden of excessive debt. This helps restore their financial stability and return to normal life.

A logical question arises: who can initiate bankruptcy proceedings? Only the individual themselves can do so. The grounds for recognizing insolvency include:

• Total amount of debt.

Until 2025, bankruptcy required the total debt amount to exceed 30 subsistence minimums.

Today, this is no longer a strict requirement. Courts now have greater flexibility to evaluate each case individually.

In other words, evaluation includes not only the amount of debt but also the ratio of income to debt, the duration of overdue payments, availability of assets, and reasons for insolvency.

As practice shows, this approach is more fair, although it does not simplify the process of declaring bankruptcy. According to last year’s statistics, the number of citizens gaining access to writing off small but significant debts has grown significantly.

Our attorneys have handled cases where bankruptcy was declared even with debts of 60–70 thousand UAH.

• Inability to fulfill financial obligations for an extended period.

This means the debtor’s financial situation does not improve but worsens, leading to payment delays.

• Total amount of obligations.

Although no strict threshold exists, in practice almost no cases are opened for debts below 50 thousand UAH. This is because any legal procedure includes expenses: attorney fees, court fees, etc. Therefore, for small debts, filing for bankruptcy is economically impractical.

• Number of creditors.

An individual may have several simultaneous debts, which makes the situation more complex.

Another key criterion is the presence or absence of resources for repayment. Such resources include property (real estate, car, land, etc.) and income (if income is deemed sufficient, the court may propose restructuring).

How Does the Bankruptcy Mechanism Work for Tax Debts?

According to current legislation, if a tax debt was incurred within the last three years before initiating bankruptcy proceedings, it is automatically classified as bad debt and written off. This applies to all types of tax debts, including the Single Tax for entrepreneurs.

Important! The bankruptcy procedure can be applied not only to classic debts of individual entrepreneurs on a single tax. It is also relevant for individuals who had or have tax obligations as individual entrepreneurs, managers or founders of LLCs, as well as for individuals who actually received income without proper registration of entrepreneurial activity.

In particular, we are talking about income received through online platforms and services (OnlyFans, Uklon, Glovo, Bolt, Etsy, Amazon, OLX, Prom, etc.), the sale of handmade goods, the provision of services or the implementation of regular purchase and sale agreements. In the event of additional taxes, fines and penalties being assessed by tax authorities, such obligations can also be included in the bankruptcy procedure of an individual and, if there are legal grounds, recognized as hopeless and written off in accordance with the procedure established by law.

After the bankruptcy procedure is completed, the tax authorities cannot force you to repay this debt.

To write off tax debt, two conditions must be met:

1. Official opening of insolvency proceedings.
2. The debt must arise before the official opening of bankruptcy proceedings.

The attorneys at “Prikhodko & Partners” strongly recommend taking advantage of this option.

First, you can partially or fully eliminate your debts. Second, the procedure is lawful and completely transparent, as confirmed by numerous court decisions. Third, after the bankruptcy procedure is completed, any creditor claims not submitted on time are considered fully satisfied, and all enforcement proceedings are terminated.

If an individual only has tax debt, the bankruptcy procedure ends even before the court officially declares the person bankrupt.

No additional restrictions arise after debt relief. Therefore, bankruptcy is an effective and quick way to resolve financial issues. The attorneys at “Prikhodko & Partners” will gladly assist you.

Do you still have questions? We look forward to providing a preliminary consultation in a format convenient for you (offline or online). To calculate the cost of legal services for financial matters, please fill out the form below.