VAT for sole proprietors (FOP) in Ukraine: when to register, 3% or 5%
Whether a FOP pays VAT depends on the tax system. On the general system registration becomes mandatory after UAH 1 million of sales. On the single tax there is no such duty, and group 3 can choose VAT. References are to the Tax Code of Ukraine (TCU), version of 17.09.2026.
1. By tax system
| Who | VAT | TCU |
|---|---|---|
| FOP on the general system | Mandatory above UAH 1,000,000 net of VAT in the last 12 calendar months, voluntary below | 181.1, 182.1 |
| Single tax, groups 1 and 2 | Cannot be VAT payers | 297.1 sub. 3, 184.1 «v» |
| Single tax, group 3 at 5% | No VAT, it is included in the single tax | 293.3 sub. 2 |
| Single tax, group 3 at 3% | VAT payer | 293.3 sub. 1 |
On the general system the registration application is due by the 10th of the month after the month the threshold was first exceeded (art. 183.2 TCU). Single tax payers of groups 1-3 are excluded from the threshold rule by art. 181.1 itself.
2. Group 3: 3% with VAT or 5% without
The choice depends on the clients. A VAT-registered client takes your VAT as input credit, so a price plus VAT costs it the same. For consumers VAT is simply 20% on top.
Services for UAH 1,000,000 a year to VAT-registered companies, no purchases with VAT. At 5%: single tax 50,000, the FOP keeps 950,000. At 3%: the client pays 1,200,000 and claims 200,000 back as input VAT. The FOP pays 30,000 single tax plus 200,000 VAT and keeps 970,000. VAT is not part of single tax income (art. 292.11 TCU).
To move from 5% to 3%, file the rate change at least 10 calendar days before the quarter starts and register for VAT (art. 293.8 sub. 4 «b»). The VAT application is due at least 10 calendar days before the month the 3% rate applies (art. 183.4). Voluntary registration on the general system: at least 10 calendar days before the first VAT month (art. 183.3).
Once registered you issue tax invoices, file a monthly return and pay the difference between output and input VAT. See VAT explained.
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