Product was damaged or lost during transportation: should compensation be included in income of individual-entrepreneur?

Press service of the State Tax Service of Ukraine, published 13 August 2026 at 13:11 Chapter: News

Loss or damage of products due to missile attacks, hostilities or force majeure during transportation are painful realities of today. Whether individual-entrepreneur needs to include in income funds it receives for lost products depends on the payment status and source of its receipt.

If payment is made by insurance company on the basis of insurance contract, it is insurance indemnity. Such funds, according to the Tax Code of Ukraine, are not included in income of the single tax payer, and therefore are not taxable.

If the product cost is reimbursed by the carrier upon a claim for loss or damage to the cargo, such compensation is not considered insurance compensation. In this case, compensation amount must be included in income of individual-entrepreneur with appropriate taxation.

Receipt date of income is considered the receipt day of funds in cash or non-cash form, and income itself is determined on the basis of accounting data maintained by the single tax payer.

At the same time, in each specific situation, terms of business transaction, payment essence and primary documents are important. They confirm whether the funds received are insurance compensation or compensation from the carrier, which determines their taxation procedure.