Self-employed individuals who are mobilized or have signed a contract for military service are exempted from paying taxes. Condition is that they are registered as individuals-entrepreneurs or independent professional activity entity before the date of conscription or conclusion of the contract.
Exemption right is provided for by the Law of Ukraine № 4505-IХ as of 18.06.2025, which entered into force on 05.07.2025.
Such individuals-entrepreneurs and individuals involved in independent professional activities, whether or not they had employees, are exempted from accrual, payment and reporting from:
- personal income tax;
- single tax;
- military levy.
Exemption applies from the 1st day of month in which such person is called up for military service or contract is concluded (but not earlier than 24.02.2022), until the last day of month in which person is demobilized (discharged from service).
What if individual, after being drafted for military service or concluding contract, registered as individual-entrepreneur or as person involved in independent professional activities?
In this case, individuals accrue and pay taxes on a general basis and submit reports in the usual manner. With entry into force of the Law № 4505 (from 05.07.2025), right to tax exemption does not apply to such individuals.
What if mobilized individual-entrepreneur of Group III exceeded established amount of income during a calendar year in which such mobilized individual-entrepreneur performed military service?
Individual-entrepreneur of Group III is obliged to make a transition to the general system if, during a calendar year, even during military service, he/she exceeded income limit.
In case of failure to make such transition, registration as the single tax payer may be canceled. Grounds for this are specified in:
- Sub-paragraph 298.2.3 of Paragraph 298.2 Article 298 of the Tax Code – list of cases and deadlines in which the single tax payers are obliged to switch to paying other taxes and levies;
- Paragraph 299.10 Article 299 – conditions for registration cancellation.
What if status of the single tax payer was canceled during service due to the tax debt presence?
If individual-entrepreneur who is undergoing military service was excluded from Register of the single tax payers due to the tax debt presence, the Tax Service is obliged to renew his/her status from the cancellation date, if cancellation occurred during the service.
For reference: Paragraph 25 Sub-section 10 Section XX “Transitional Provisions” of the Tax Code of Ukraine, Law of Ukraine № 4505-IХ as of 18.06.2025 “On amendments to the Tax Code of Ukraine and other Laws of Ukraine regarding expanding patients’ access to medicines subject to procurement by the person authorized to make procurements in the healthcare sector by concluding managed access contracts”.
