Taxes and accounting of a lawyer
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According to p.p. 14.1.226 clause 14.1 of Art. 14 of the Tax Code of Ukraine, a self-employed person is a taxpayer who is an individual entrepreneur or conducts independent professional activity, provided that such person is not an employee within the scope of such entrepreneurial or independent professional activity. Independent professional activity – the participation of a natural person in scientific, literary, artistic, artistic, educational or teaching activities, activities of doctors, private notaries, lawyers, auditors, accountants, appraisers, engineers or architects, a person engaged in religious (missionary) activities, other similar activity, provided that such a person is not an employee or an individual entrepreneur and uses the hired labor of no more than four individuals.
According to p.p. 14.1.226 p. Article 14.1 14 of the Tax Code of Ukraine self-employed person – a taxpayer who is an individual entrepreneur or carries out independent professional activity, provided that such person is not an employee within the scope of such entrepreneurial or independent professional activity. Independent professional activity – the participation of a natural person in scientific, literary, artistic, artistic, educational or teaching activities, activities of doctors, private notaries, lawyers, auditors, accountants, appraisers, engineers or architects, a person engaged in religious (missionary) activities, other similar activity, provided that such a person is not an employee or an individual entrepreneur and uses the hired labor of no more than four individuals.
Taxation of income received by a natural person engaged in independent professional activity is regulatedArt. 178 ch. IV of the Tax Code of Ukraine (hereinafter – PKU ). Persons who intend to carry out independent professional activity are obliged to register with the state tax service authorities at their place of permanent residence as self-employed persons and obtain a certificate of such registration in accordance with Art. 65 of the PKU.
Citizens’ incomes received during the calendar year from independent professional activities are taxed at the rates specified in p. 167.1 Art. 167 of the PKU. Taxable income is considered to be total net income, i.e. the difference between income and documented expenses necessary for carrying out a certain type of independent professional activity.
In case of failure to receive a certificate of registration by a person conducting independent professional activity, the object of taxation is the income received from such activity without taking into account expenses.
Individuals engaged in independent professional activity submit a tax return based on the results of the reporting year within the time limits provided for individual income tax payers.
Foreigners and stateless persons who are registered with the state tax service as self-employed persons are residents and in the annual tax declaration, along with income from independent professional activities, they must indicate other income from sources of their origin in Ukraine and foreign income.
During the payment by economic entities – tax agents, to natural persons engaged in independent professional activity, of income directly related to such activity, income tax is not withheld at the source of payment if such an individual provides a copy of a certificate of his/her tax registration as an individual engaged in independent professional activity. This rule does not apply in case of accrual (payment) of income for the performance of certain work and/or the provision of a service in accordance with a civil law contract, the relationship under which is established by labor relations, and the parties to the contract can be equated to an employee or an employer in accordance with pp. 14.1.195 and 14.1.222 p. Article 14.1 14 PKU.
Individuals who conduct independent professional activities are required to keep records of income and expenses from such activities . The form of such accounting and the procedure for its maintenance are determined by the central body of the state tax service. The final calculation of personal income tax for the reporting tax year is carried out by the payer independently according to the data specified in the tax return.
Registration of self-employed persons (Article 65 of the Code of Civil Procedure)
Registration of self-employed persons is carried out by entering into the State Register of Taxpaying Individuals records of state registration or termination of business activity, independent professional activity, re-registration, registration, removal from registration, making changes regarding a self-employed person, etc. Accounting of self-employed persons is carried out with the help of additional records of state registration or termination of entrepreneurial activity, independent professional activity, etc. by natural persons. Entries in the State Register are made in accordance with the Taxpayer Accounting Procedure.
Enrollment at the main place of registration of an individual entrepreneur is carried out by the state tax service body at the place of its state registration after its state registration in accordance with the Law of Ukraine “On State Registration of Legal Entities and Individual Entrepreneurs” on the basis of information from the registration card provided by the state by the registrar in the prescribed manner.
At the request of a natural person-entrepreneur, registration of such a person can be carried out by the state tax service body, if such a person submits relevant documents to the state tax service body.
Independent professional activity – participation of a natural person in scientific, literary, artistic, artistic, educational or teaching activities, activities of doctors, private notaries, lawyers, auditors, accountants, appraisers, engineers or architects, a person engaged in religious (missionary) activities, other similar activities, provided , that such a person is not an employee or an individual entrepreneur and uses the hired labor of no more than four individuals.
Registration of natural persons who are not entrepreneurs and carry out independent professional activity, the condition for conducting which, according to the law, is state registration of such activity in the relevant authorized body and obtaining a certificate of registration or other document (permit, certificate, etc.) confirming the right of physical persons to conduct independent professional activities, is carried out at the place of permanent residence in accordance with the procedure established for individual entrepreneurs. In order to be registered, a natural person who intends to carry out independent professional activity, within 10 calendar days after the state registration of independent professional activity in the relevant authorized body and receiving a registration certificate or other document (permit, certificate, etc.), must submit in person (send by registered mail with a description of the attachment) or through an authorized person to the state tax service body at the place of permanent residence, an application with relevant documents (defined in clause 6.7.1. Procedure for accounting of taxpayers and fees, approved by order of the Ministry of Finance of Ukraine dated 09.12.2011 No. 1588)
The state tax service body may refuse to consider documents submitted for registration of a person engaged in independent professional activity. The list of grounds for such a refusal is given in para. 65.4.1 – 65.4.5 of the PKU. After eliminating the specified grounds, an individual can re-submit documents for registration.
Enrollment of natural persons-entrepreneurs is carried out by the state tax service no later than the next working day from the date of receipt of relevant information from the state registrar or from the date of receipt of an application from them in the established form. Enrollment of natural persons engaged in independent professional activity is carried out no later than the next working day from the date of receipt of an application from them in the established form.
The registration certificate is sent (issued) free of charge on the next working day from the day of registration. In case of loss or damage of the certificate, its replacement is also carried out free of charge.
The certificate of registration of a taxpayer, which is issued to an individual engaged in independent professional activity, shall specify the term of carrying out this activity, if such term is indicated in the registration certificate or other authorization document.
Self-employed persons are required to submit to the state tax service authorities at their place of registration information about changes in accounting data within one month from the date of such changes. From the moment of changes in the data on a natural person, the certificate of registration of a self-employed person becomes invalid and must be replaced by the state tax service.
The subject of registration of a self-employed person is also the entry into the State Register of the termination of the business activity of an individual entrepreneur or independent professional activity of an individual. The grounds for such a record are specified in para. 65.10.1 – 65.10.8 of the Tax Code.
Registration of the termination of entrepreneurial or independent professional activity by a self-employed person does not terminate his obligations that arose during the conduct of such activity and does not change the order of their performance. A natural person is liable for non-fulfillment of such obligations in accordance with current legislation.
If, after making a record of termination of entrepreneurial or independent professional activity in the State Register, a natural person continues to carry out such activity, it is considered that he started such activity without taking it into account as a self-employed person, for which liability is provided by law.
A law firm and a law association, as legal entities, may choose or switch to a simplified taxation system with the payment of a single tax, subject to compliance with the requirements established by Chapter 1 of Chapter XIV of the Tax Code of Ukraine.
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