Overview of the restrictions for individual entrepreneurs (FOP) — 3rd group
The third group of the single tax gives entrepreneurs flexibility to work with a variety of clients and allows them to pay a single tax instead of a set of separate taxes and fees. It suits the sale of goods, provision of services, leasing of property, e-commerce and many other types of activity.
At the same time, the right to remain on the simplified system is tied to specific conditions. Lawyers point to two key points: the annual income limit and the list of activities that are incompatible with the simplified system. Experts at Yankiv discuss this.
Annual income limit and how it is calculated in 2026
The main restriction for the FOP 3rd group is the annual income limit. The Tax Code allows you to remain on the third group if your income for the calendar year does not exceed 1,167 times the minimum wage set on 1 January of the relevant year.
For 2026 the minimum wage on 1 January is 8 647 UAH. Using that figure, the maximum annual income for the FOP 3rd group is 10 091 049 UAH. If the minimum wage rises later in the year, that does not change the limit used to calculate the whole year. The calculation always uses the figure as of 1 January.
Key date for determining the annual limit is 1 January of the year for which you calculate income.
How the income accounting mechanism works, step by step
To understand the risks it is easier to set out the process in clear steps. Below is a brief guide to how the calculation is made and what happens if the limit is exceeded.
- Gather all receipts from entrepreneurial activity for the calendar year in both cash and non-cash form, including the value of goods, works or services received free of charge.
- Compare the total with the limit of 1,167 minimum wages set on 1 January of the relevant year.
- If the total exceeds the limit, this may lead to the application of an increased single tax rate or the transfer to the general taxation system by tax authorities.
- Keep records and verify the classification of receipts so as not to include items that are excluded by law.
What is included in income and what is excluded
The income of a single-tax payer includes funds from entrepreneurial activity in cash or non-cash form. Income in material or non-material form is also counted in cases provided for by law. This includes the value of goods, works or services received free of charge if they are related to the activity.
Certain receipts are not included in the income of the single-tax payer. Among them are passive incomes of an individual — dividends, interest, royalties, insurance payments and insurance compensations — as well as state grants. It is important to classify each payment correctly to avoid mistakes.
Consequences of breaching the rules and what to do
If an FOP does not comply with the established requirements, tax authorities may apply an increased single tax rate or transfer the entrepreneur to the general taxation system. There may also be other tax consequences depending on the nature of the breach.
To reduce risk, monitor the total income received and track the composition of receipts. Periodically reconcile your accounts and keep documents that explain the origin of funds or the value of goods or services received in kind. If in doubt, consult a tax adviser or a lawyer specialising in taxation to obtain clarification and minimise the risk of losing the simplified system.
Who this directly affects and concrete steps to take today
This concerns entrepreneurs in the third group in 2026 and those whose annual income is approaching 10 091 049 UAH. Attention should also be paid by those whose part of receipts arrives in the form of goods or services instead of cash.
What to do now: check the amount of income for the current year, prepare documents that confirm the classification of receipts and, if necessary, consult a lawyer or accountant about the consequences of exceeding the limit. Experts at Yankiv are already discussing the risks and details of necessary measures.
